Listed crypto advisory firm DigitalX has launched a fund that will predominantly invest in cryptocurrencies and form part of its newly-formed funds management division led by a former Ellerston Capital portfolio manager.
Its inaugural fund, DigitalX Investments, will invest mainly in cryptocurrencies but allow ICOs, crypto derivatives, cash, and managed investment schemes.
"We believe cryptocurrencies are under-researched by mainstream asset managers and there is an opportunity to leverage our expertise in Blockchain technology and crypto-asset investment to create value for our clients," DigitalX managing director Leigh Travers said.
Former Ellerston Capital portfolio manager Tim Davies has been appointed as the head of digital investments and will also act as portfolio manager to the fund.
The newly-formed DigitalX Funds Management business will act as the fund's investment adviser and parent-company DigitalX will hold a 73% interest, putting in $750,000 in seed capital drawn from its existing Bitcoin and Ethereum asset base.
The fund can hold more than 20% in cash. However, all individual investments except Bitcoin will have a 20% maximum limit.
Davies will also run DigitalX's treasury operations. He was a Goldman Sachs associate director from 1998 to 2001. He was also the Caledonia Asia Fund's chief Investment officer from 2010 to 2012.
The investment team's job will include advising on legal jurisdiction constraints for ICOs.
Grange Capital representative Boutique Capital has been appointed to administer the fund, drawing 2% of the fund's net asset value as annual fees and a performance fee.
The crypto asset manager reported $10.3 million in net profit from consulting services for the six months ending 31 December 2017.
The new fund is not expected to make material changes to DigitalX's balance sheet, as it will use existing assets, the company said.