Asset Management
Asset Management

FAQ

What is an index?

An index is a measurement of the financial performance of a defined group of assets. For example, the S&P 500 is a measurement of the performance of 500 of the largest stocks in the US.

An index is displayed as an ‘index level’, a number that shows how the index has performed over time. Unlike actual assets, e.g. stocks, an index doesn’t have its own price in dollars.

What is an index fund?

An index fund is an investment vehicle that tracks an index. It enables investors to get returns that track the index, by investing in the fund.

Index funds exist for many asset classes, including some of the most well-known indexes like the S&P 500 and the FTSE 100.

Who can invest in Coinbase Index Fund?

At this stage, you must be a US resident, accredited investor to invest in Coinbase Index Fund.

Our vision is to make index investing in digital assets available to everyone. We are beginning the work required to offer index funds to all US investors.

In the future, we hope to be able to offer index investing to customers in the US and internationally.

How does Coinbase Index Fund work?

Coinbase Index Fund seeks to track Coinbase Index (Fixed Supply) — a version of Coinbase Index that removes the effect of ongoing supply increases, to make the index capable of being tracked.

Each time that an investor invests in the fund, the fund deploys the investor’s capital by buying assets in proportion to their weighting in the index. When an investor wants to leave the fund, the fund can sell assets in proportion to their market weighting in the index at that time, and return the proceeds to the investor.

Please refer to these important notices regarding Coinbase Index Fund.

Does Coinbase Index Fund have target allocations for each asset?

No. The objective of Coinbase Index Fund is to track Coinbase Index (Fixed Supply). Unlike actively managed investment funds, the fund manager does not actively trade assets, or target a specific allocation for any asset.

Please note that due to fees, expenses and tracking error, the returns realized by investors in the fund may differ from the returns of the index. Please refer to these important notices regarding Coinbase Index Fund.

Why does Coinbase Index Fund track Coinbase Index (Fixed Supply) instead of Coinbase Index?

The supply of most digital assets is constantly increasing, as new coins or tokens are generated according to a formula in the blockchain protocol.

The new coins or tokens are awarded to miners, not to passive holders. Investors, including funds, cannot benefit from the value of the new coins or tokens. For this reason, an investable cryptocurrency index should remove the effect of the new coins or tokens.

Coinbase Index is based on total market capitalization, including the latest supply figures for each asset. Coinbase Index (Fixed Supply) is a modified version that removes the effect of supply increases, to make the index capable of being tracked by investors.

For more detail, refer to section 6 of the Coinbase Index Construction and Methodology.

Who operates Coinbase Index Fund?

Coinbase Index Fund is operated by Coinbase Asset Management, Inc. and Coinbase Fund Manager, LLC, (together “CBAM”), affiliates of Coinbase, Inc.

Is Coinbase Index Fund separate from Coinbase and GDAX?

CBAM and Coinbase are dedicated to the principle that Coinbase Index Fund will be operated separately from GDAX to help ensure the integrity of trading on GDAX.

Both CBAM and Coinbase have adopted policies and procedures intended to ensure that Coinbase Index Fund will be operated separately and that the fund will be treated no differently than any other GDAX client. For example, these policies and procedures require that:

  • CBAM is a separate legal entity from Coinbase, Inc. (which operates Coinbase and GDAX).
  • Coinbase Index Fund will generally use GDAX to buy and sell digital assets, but Coinbase Index Fund will not have any priority over other GDAX customers in the placement and execution of orders.
  • Access to non-public GDAX information will be appropriately restricted within Coinbase and CBAM, and the compliance departments of both CBAM and Coinbase will actively monitor the fund's trading activity, to help ensure the integrity of the GDAX trading environment.

In addition:

  • The investment strategy for Coinbase Index Fund is public: buy and hold the assets in Coinbase Index (Fixed Supply) in proportion to their weighting in the index. Coinbase Index Fund will not execute any other trading strategy.
  • Buy and sell orders for Coinbase Index Fund are executed algorithmically on GDAX, in accordance with established procedures, with only limited input from CBAM personnel.
  • CBAM personnel are required to disclose all holdings of digital assets and are prohibited from personal trading of digital assets without prior written approval from management.

Does Coinbase Asset Management offer actively managed funds?

No. Coinbase Asset Management only offers passively managed index funds. There is no plan to offer actively managed funds.