When it comes to digitalisation, there is no way past "machine learning". This is an area of artificial intelligence that generates knowledge from experience, attempting to identify patterns and regularities in huge data pools using a variety of algorithms. It was this innovative technology that Swissquote Bank utilised some three years ago to develop the Swissquote Bitcoin Active Index. This was the first cryptocurrency strategy to be listed on the stock market and has turned in a significant outperformance to date. The matching tracker certificate (ISIN CH0372703436) from Leonteq performed around 29% better than a direct investment in bitcoin – even after allowing for the charges. The term of the index instrument is ending in November.
Bitcoin fans have no need to worry, though, because the profitable strategy is being renewed, with a successor product (ISN CH0542378622) having been launched on the Swissquote Bitcoin Active 2.0 Index recently. Rather than a fixed expiration date, an open-ended structure has been chosen for this tranche, removing the need for portfolio adjustments in the future. As already mentioned at the start, behind the structured product is a machine-learning-based strategy in which data from different sources are gathered in order to form quality indicators. These are made up of an average value of the changes, the volatility achieved, the buy and sell pressure and a social index for the mood on the market. The algorithm compiles and interprets this wealth of data, identifies the short-term development of the future yield and then structures the portfolio on the basis of this comprehensive analysis. To limit volatility, at least 60% and at most 100% of the portfolio comprises bitcoin, with the US dollar accounting for a minimum 0% to maximum 40%.
The tracker certificate offered by Leonteq gives a one-to-one participation in the Swissquote Bitcoin Active 2.0 Index. Quoted in US dollars, the product launched at a price of 1,000 on 27 July 2020, since when the price has risen by more than one fifth. As it is an actively managed certificate, charges are levied. These consist of costs for calculation in the amount of 0.35% p.a. and a management fee of 1.00% p.a. There is also a rebalancing fee of a low 0.15% p.a., giving an ultimate total charge for the holder of the certificate of not more than 1.5% p.a.
While many investors are now giving serious consideration to buying cryptocurrencies, possessing and trading in them is certainly not without risk. As well as the sometimes high fluctuations in the BTC, hacking attempts can also become a problem. Although attacks on the bitcoin blockchain are relatively unlikely, because this is kept under permanent monitoring, people and websites are certainly in the sights of cyber criminals. The popular crypto exchange Mt.Gox, for instance, was hacked in 2013, leading to the loss of 800,000 BTC. The wallets that are used to store cryptocurrencies are also frequently the target of internet thefts. By contrast, the tracker certificate on the Swissquote Bitcoin Active 2.0 Index offers simple and protected access to bitcoin. The instrument remains securely in your portfolio as usual.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.
