The Full Breakdown
What are Digital Assets
Digital Assets use cryptography to secure and verify transactions as well as to control the creation of new units of a particular digital asset/cryptocurrency. Essentially, digital assets are limited entries in a database that no one can change unless specific conditions are fulfilled. There are over 3,000 different digital assets in existence today.
Emerging Asset Class
Digital assets have become an emerging asset class. Although presently unregulated, tremendous strides are taking place to ensure that digital assets become a regulated asset class like traditional investments. Consequently, this provides a tremendous opportunity for early adopters. Even though the digital asset market is high risk, it can provide a high reward. Therefore, it is essential to diversify by gaining exposure to this emerging asset class.
Power of Diversifying with Digital Assets
Adding digital assets to your portfolio can be an effective way to diversify and create higher risk adjusted returns. Digital assets are non-correlated with traditional markets and can actually improve the risk profile of your portfolio. Below is a GCG Market Research study of 4 different portfolios with an inception date of January 1st, 2015 and an end date of May 31st, 2018.
Every portfolio that had digital asset exposure outperformed the portfolio with no digital asset exposure, the “Traditional” portfolio. By adding a digital asset allocation, all three portfolios increased their average return and reduced their US Market Correlation. More importantly, all three portfolios were able to reduce their maximum drawdowns. Given digital assets are non-correlated with traditional investments, they may act as a hedge for your portfolio.
© 2019 Groff Consulting Group
Chicago, IL 60661
GCG is not a registered broker, dealer, investment adviser, investment manager or registered funding portal. The securities offerings on this site are available only to "Accredited Investors" – generally, natural persons must have a net worth of over $1 million (exclusive of residence) or income in excess of $200,000 individually or $300,000 jointly with a spouse.
The performance represented is historical; past performance is not a reliable indicator of future results.
The overviews presented on the GCG website do not constitute an offer to sell or a solicitation of an offer to make an investment herein. No such offer or solicitation will be made prior to the delivery of definitive documentation relating to such investment. The information on this website does not constitute an offer of, or the solicitation of an offer to buy or subscribe for, any securities to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful.
The SEC, CFTC and other regulators have expressed concerns with the volatility of the market and the actions of sponsors of specific cryptocurrencies. So be sure to review their official consumer alerts such as the public statement on cryptocurrencies by the SEC.