Partner Content: Why family offices should choose a fund for their digital assets investments

Family Capital sat down with Maurice Mureau, the CEO of Hodl Group, to explore the world of digital assets, highlighting the opportunities and challenges and shedding light on how Hodl empowers family offices in building diversified portfolios securely.

The challenges for family offices

Over their 15 years of existence, digital assets have raised many emotions in the public’s imagination. But investors, not least family offices, would be unwise to ignore them and exclude them from their portfolio, despite concerns over their volatility and security.

However, investing in this new asset class comes with its challenges. Next to the endless amount of blockchain projects and the complexity of the new technology, the amount of regulated investment vehicles is still limited. Recently, we have seen this sentiment change. 

BlackRock, WisdomTree, Valkyrie Investments and many others filed applications for a Bitcoin spot ETF. While this may open the doors to institutional investors, it is still creating limited exposure due to the concentration on a single asset. 

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Netherlands-based Hodl Group, a digital assets fund manager, aids professional investors and family offices in their investment process. Hodl simplifies this process by offering regulated and diversified investment opportunities based on the best-in-class security solutions and the latest insights from experienced analysts.

Hodl traces its experience in digital assets back to the early days of the industry in 2012 when one of its co-founders Nick Friedrich started to explore the underlying technology. Ever since, Nick has become an expert in blockchain, digital assets and algorithmic trading. Maurice is very much on the traditional finance side of the business, where he has more than 25 years of experience as a senior manager at various major wealth management businesses. 

“Hodl is unique since we combine our experience in traditional asset management and data analytics with a digital assets native approach, enabling us to optimise our strategies and results. Through this approach, we helped hundreds of investors since 2017,” says Mureau. 

Hodl’s success as a digital assets fund manager has seen the business grow from just a few staff members in 2017 to well over 30 to date. When it comes to the in-house talent, Mureau says, “A combination of younger crypto-natives and seasoned board members with decades of experience in various industries has created a dynamic mix of curiosity, professionalism and excellence.”. 

The Hodl Funds

Currently, Hodl offers two strategies: Actively Managed and Algorithmic Trading. These strategies are offered through registered and/or regulated funds in the Netherlands, Gibraltar, Luxembourg, Spain and an Actively Managed Certificate product in Switzerland.

Later this year, Hodl will introduce its third strategy: Venture Capital. This strategy is focused on early-stage investments and aims to back the most promising start-ups in the blockchain and Web3 ecosystem.

About the Actively Managed strategy, Mureau says: “Our analysts are rebalancing and optimising our investment portfolios daily. This way, Hodl anticipates the latest market movements, trends and developments. Until this point, we are long-only, but we are building capacity to go short as well.”

“In addition, Hodl has built sophisticated algorithms which allow us to capitalise on the volatility of the market. The industry is known for its high volatility, and for newcomers, this causes challenges. But when you become longer active in the industry, it becomes an opportunity, so with our algorithms, we can play the volatility, allowing our clients to benefit,” continues Mureau. 

The appeal of Hodl Funds for investors like family offices are many, but not least that they correlate differently to other asset classes. “They act as a hedge in your portfolio,” says Mureau. “As a result, we have witnessed that the risk/reward ratio of our clients improves, which family offices are very interested in.”, Mureau continues.

Security and transparency

The flow of capital has improved considerably in the last few years, and Hodl deals with all the technicalities of investing in them. “You go in with your preferred fiat currency, and we take care of it,” says Mureau. “At Hodl, you can invest in cryptocurrency in a straight-forward approach. You don’t have to worry about different wallets, exchanges and private keys.”

Security is our utmost priority, states Hodl, and in the company’s history, they haven’t experienced a security breach or had funds compromised. Furthermore, redemptions are fully transparent, with monthly liquidity and no lock-ups. 

Through Hodl’s integration with the best-in-class security solution, Ledger Vault, its funds provide the highest level of security. The Hodl funds are registered in various jurisdictions, the firm answers to multiple regulatory bodies and has established close contact with local authorities to enable transparent communication. 

Moreover, products in Gibraltar and Switzerland are fully regulated, making it convenient for family offices to choose Hodl as a partner for their investments. Additionally, the

funds are structurally audited by a third party to confirm the validity of the fund’s holdings. 

How much to allocate to cryptocurrencies

Hodl advises family offices an allocation to digital assets between 1% and 5%. This asset class is still growing and investors should take the volatility of the industry into account. In the long term, however, digital assets provide great opportunities.

Considering that traditional financial institutions and the biggest asset managers are joining the space and regulations will be introduced in Europe with the Markets in Crypto-Assets Regulation (MiCAR), it is to be said that the space is reaching a new level of maturity.

Mureau finally concludes by saying that family offices are often the most sophisticated investors regarding cryptocurrencies. 

“They often rebalance their portfolios, sell when they’ve done well, and buy more when cryptocurrencies are underperforming. That is a big advantage of a family office client – they get the market.”