Cryptocurrency investment funds are getting increasingly popular. Our report from last month pointed out that the number of such funds around the world had doubled in just four months! The latest name to start off a cryptocurrency index fund is Coinbase - the popular cryptocurrency exchange. The Coinbase Index Fund was first announced by Assif Hirji, the COO of Coinbase during an appearance on ‘Fast Money’ on CNBC before formally being announced via a blog post on Coinbase. 

The Coinbase Index Funds allows investors access into all cryptocurrencies listed on the GDAX exchange. If GDAX adds a new currency to their platform in the future, this currency would automatically be listed on the Coinbase Index Fund as well. As of this moment, the digital assets that the Coinbase Index Fund, GDAX and the Coinbase platform offer are Bitcoin, Bitcoin Cash, Litecoin and Ethereum.

The Coinbase Index Fund, much like most other US-based cryptocurrency investment funds is open only for US citizens who are certified accredited investors and are willing to invest a minimum of $10,000. Coinbase also states that it intends to launch more funds which will be available to global investors and will contain a broader range of digital assets. 

Commenting on the Coinbase Index Fund in the official Coinbase blog,Reuben Bramanathan stated: Index funds have changed the way that many people think about investing. By providing diversified exposure to a broad range of assets, index funds enable investors to track the performance of an entire asset class, rather than having to select individual assets. We’re excited to give our customers the ability to invest in the potential of blockchain-based digital assets as a whole.

The Coinbase Index Fund is quite similar to the Digital Large Cap Fund, which was recently launched by Grayscale Investments. The digital assets in both funds hold weighted positions based on their market cap. However, one of the biggest differences between the two cryptocurrency investment funds is that the Digital Large Cap Fund also has Ripple - a currency which is currently lacking from Coinbase (Read: No, Coinbase and GDAX are NOT adding Ripple Support). 

Another major difference between the Coinbase Index Fund and the Digital Large Cap Fund is that of the fact that while investors in the DLCF can invest only in Fiat money, investors investing into the Coinbase fund can purchase shares using cryptocurrencies listed on GDAX. Yet another difference comes when you look at the management fee that the exchanges charge. Coinbase Investment Fund charges an annual fee of 2%, which is cheaper when compared to Digital Large Cap Funds 3% fee. 

Cryptocurrency investment funds are getting increasingly popular these days. It is expected that while retail investors helped drive the cryptocurrency prices forward in 2017, the price growth in 2018 would be driven by large investments made by these institutional investors. The parent company of the Digital Large Cap Fund, Grayscale Investments announced yesterday that they are starting off with cryptocurrency investment funds for Ripple, Ethereum, Bitcoin Cash and Litecoin.