Digital Access Fund: A Guide To Investing Wisely

The world of digital investment is a rapidly growing and dynamic sector, with digital assets now considered a major asset class. From cryptocurrencies like Bitcoin and Ethereum to digital gold, investors are increasingly looking to digital investment to diversify their portfolios and seek potential returns. With a market capitalization of over $2 trillion, the digital asset ecosystem offers a range of investment opportunities, including blockchain technology, cryptocurrency mining, and financial instruments. One example of a digital investment fund is Digital Invest, a U.S. government-funded program that aims to accelerate investments in digital finance and internet service providers in emerging markets. Digital investment funds, such as DACM, offer a range of strategies for investing in digital assets, including liquid directional, market neutral, and venture capital approaches. Additionally, financial institutions like Fidelity Digital Assets provide platforms for institutional investors to manage their digital assets. With the continuous evolution of blockchain and cryptocurrency, digital investment is an attractive option for those looking to explore new investment opportunities.

Digital gold investment: a diverse portfolio with tax benefits

Digital gold is a convenient way to invest in gold in small payments from anywhere, anytime. It is a great way to build a diverse investment portfolio.

Gold Exchange-Traded Funds (ETFs)

Gold ETFs are funds that invest in gold and can be bought and sold on stock exchanges. In India, investors are required to purchase a minimum of one unit, equivalent to one gram of gold, to begin trading in gold ETFs. Some popular gold ETFs in India include Axis Gold ETF, Birla Sun Life ETF, and HDFC Gold Exchange Trade Fund.

Gold Mutual Funds

Investors can purchase shares in mutual funds that base their holdings on stocks of international gold mining companies and other assets exposed to the gold market, like gold ETFs. These mutual funds track the price of gold, and popular examples in India include Invesco India Gold Fund, SBI Gold, and Nippon India Gold Savings Fund.

Gold Futures Contracts

Gold futures are standardized contracts that trade on organized exchanges. Investors commit to buying or selling a specific quantity of gold at an agreed-upon price in the future. Gold futures are considered high-risk and are suitable for mature investors.

Sovereign Gold Bonds (SGBs)

The Government of India offers SGBs via the Reserve Bank of India. These bonds provide price appreciation plus a 2.5% yield and are considered lucrative due to their sustained return on investment. SGBs are also low-risk as they are backed by the government and offer tax-free capital gains at maturity.

Benefits of Digital Gold Investment

• Purity: When investing in digital gold from authorized dealers, you take ownership of 99.9% 24K pure gold, the highest form of pure metal.
• Security: Digital gold is stored in a Demat account, ensuring theft-free security, and can only be traded by the investor.
• Passive Income: Investing in SGBs provides passive income in the form of interest.
• No Making Charges: Digital gold is free of any making or manufacturing charges.
• Awareness: Advanced technology has made information about digital investments easily accessible to households.
• Better Returns: Lower rates on fixed deposits have led people to invest in safer and more profitable methods like digital gold.
• Liquidity: Digital gold is easy to trade and can be converted into physical gold, providing excellent liquidity for short-term and medium-term investors.
• Tax Benefits: There is no wealth tax, sales tax, value-added tax, or securities transactions tax levied on digital gold investments. Additionally, capital gains on SGBs are tax-free at maturity.

Crypto and blockchain: a dynamic, growing asset class

Digital assets are an important, emerging asset class, with a market capitalization of over $2 trillion. This includes cryptocurrencies like Bitcoin and Ether, as well as the underlying blockchain technology. Blockchain is an unchangeable database that allows data to be recorded and distributed across a global network of computers, offering increased decentralization, security, and transparency.

Cryptocurrencies as a Store of Value

While cryptocurrencies have a market cap of over USD 1.7 trillion, they are considered illiquid compared to other asset classes. However, their holders tend to hold on to their investments for longer, suggesting that cryptocurrencies could be considered a store of value, similar to precious metals, currencies, and fine art.

Unique Characteristics of Cryptocurrencies

There are four key characteristics that set cryptocurrencies apart from traditional asset classes:

• Investability: Despite low liquidity, cryptocurrencies have improved in accessibility and remain independent of regulation and capital controls.
• Politico-Economic Profile: Cryptocurrencies are underpinned by innovative blockchain technology, which enables decentralized governance.
• Correlation of Returns: Cryptocurrencies have historically shown a weak correlation with the price development of other assets, but this has strengthened due to COVID-related market episodes, indicating their potential as a short-term risk-on asset.
• Risk-Return Trade-off Profile: Adding cryptocurrencies to traditional investment portfolios can improve their risk-return profile, but due diligence is required due to the new and evolving nature of this asset class.

Broad Investment Opportunities

The digital assets ecosystem encompasses more than just cryptocurrencies and blockchain. It includes companies involved in mining, technology, and blockchain applications. Each aspect presents a range of investment opportunities, from direct ownership of cryptocurrencies to investment funds and vehicles.

Managing Risk

Investing in digital assets carries risks, including price volatility, regulatory changes, security threats, and the potential for fraudulent activity. Therefore, it is essential for investors to conduct careful due diligence and consider the risks and benefits of various investment instruments.

Digital asset management: Fidelity's Crypto offering

Fidelity Digital AssetsSM is a dedicated business created by Fidelity Investments® to address the needs of today's investors in the innovative digital asset class. Fidelity Digital AssetsSM provides a custody and trading platform for investors to manage their digital assets. The platform offers integrated custody and trading, allowing investors to seamlessly access digital assets in their portfolios.

Fidelity Digital AssetsSM is built on the history, principles, and expertise of the broader Fidelity Investments business. With over 10 years of digital asset experience, Fidelity has been an early mover in the digital asset space, researching Bitcoin and blockchain technology since 2014. Their products continue to evolve to support clients across the rapidly evolving digital asset landscape.

Fidelity Digital AssetsSM provides services for Fidelity Crypto®, enabling individual investors to buy and sell digital assets through the Fidelity Investments® App. Fidelity Crypto® is designed for individual investors, offering an integrated trading platform with access and choice to meet evolving needs.

Fidelity's digital solutions are built on the rich history of their traditional finance business, leveraging their expertise to deliver security, integrity, and institutional expertise. They provide robust custody controls, enforcing rigorous physical, cyber, and security controls to protect assets and mitigate risk. Fidelity also offers dedicated client service with live, 24/7 support to address unique business needs.

With Fidelity Digital AssetsSM, investors can confidently invest using a platform trusted by leading institutions. The platform undergoes SOC 1 Type 2 and SOC 2 Type 2 audits annually and provides industry-leading research and education with exclusive insights for clients. As the digital asset ecosystem evolves, Fidelity is committed to innovation, helping advance the space through continual strategic investments.

Digital asset sector: DACM's funds for investors

Digital asset sector: DACM funds for investors

DACM, or Digital Asset and Crypto Management, is an institutional investor with a focus on the digital asset sector. Established in 2017, DACM offers professionally managed investment opportunities in the world's fastest-growing tech sector.

Investment Philosophy

DACM's investment philosophy is designed for family offices and institutional investors and has been tested across multiple market cycles. They believe that blockchain technology, like the internet, has the potential to disrupt and reshape entire sectors of the global economy.

Investment Strategies

DACM offers a range of strategies for investors to access the dynamic digital asset sector:

• Liquid Directional: This strategy involves taking long or short positions in liquid digital assets, such as cryptocurrencies, to capitalise on market trends.
• Market Neutral: The market-neutral strategy utilises derivatives and decentralised finance protocols to provide uncorrelated returns, reducing the impact of market volatility.
• Venture Capital: DACM's early-stage venture investments focus on blockchain technology, backing innovative startups in this space.

Funds

DACM provides investors with access to a range of funds, each with its own unique characteristics:

• DACM Global Digital Asset Fund: This fund offers a portfolio of actively managed cryptocurrencies and tokens, providing wholesale investors with exposure to the dynamic digital asset sector. The minimum investment for this fund is A$50,000, with monthly liquidity after an initial 12-month lock-up period.
• DACM Market Neutral Fund: Established in August 2019, this fund specialises in market-neutral strategies and has a minimum investment requirement of US$100,000.
• DACM Liquid Venture Fund: The Liquid Venture Fund is focused on early-stage investments in blockchain technology. It was established in August 2018 and has a minimum investment of US$250,000.

Jurisdiction and Investment Minimums

It is important to note that DACM's funds are established in specific jurisdictions, with the Global Digital Asset Fund in Australia and the Market Neutral Fund and Liquid Venture Fund in the British Virgin Islands. Each fund has its own minimum investment requirements, ranging from US$100,000 to US$250,000, and investors should carefully review the details of each fund before making investment decisions.

Digital connectivity: USAID's Digital Invest program

The demand for internet connectivity and digital financial services is growing exponentially on a global scale. However, developing markets continue to lack basic access to the internet, and the poorest consumers are missing out on participating in the digital economy. The investment gap for internet connectivity alone is over $428 billion globally. To address this issue, the U.S. Agency for International Development (USAID) has launched Digital Invest, a U.S.-government funded program. The program aims to accelerate new investments that benefit digital finance and internet service providers in emerging markets.

Digital Invest is overseen by a team of technical experts at USAID who provide customized support to the private sector. The program selects and supports investment fund managers, wholesale internet infrastructure providers, and other private sector partners. It works with each partner to identify and provide targeted, risk-tolerant, catalytic capital to increase their ability to secure private sector funding. With more flexibility than a traditional grant, Digital Invest provides an average of $500,000 per partner, with the objective of unlocking greater investment towards resilient digital infrastructure, increased digital inclusion, and stronger economic development.

Since its launch in 2022, Digital Invest has provided $8.45 million in U.S. government funding to partners, who have raised over $275 million in investment capital, with more than $475 million expected. Digital Invest partners have invested in over 60 technology companies across 38 countries, including expanding broadband connectivity infrastructure in Liberia, developing a digital payment platform in Uzbekistan, and supporting female investors and tech founders across South and Southeast Asia.

Digital Invest is led by USAID's Innovation, Technology, and Research Hub and is part of the U.S. government's Digital Connectivity and Cybersecurity Partnership (DCCP). The program was announced by President Biden in June 2022 as a flagship program under the G7-led Partnership for Global Infrastructure and Investment.

Frequently asked questions