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Matt Hougan shared: Today, we’re launching the Bitwise Blue-Chip NFT Index Fund, the world’s 1st NFT index fund. NFTs are a historic movement, and just getting started. The fund holds the 10 most valuable NFT collections: CryptoPunks, Bored Apes, Fidenza, etc.

First, the holdings. The index selects & weights NFTs based on “market cap” (using “floor prices”). It rebalances quarterly. The goal: Own the iconic blue-chips of today, & add those that emerge in the future. The index also has eligibility rules that exclude some NFTs.

The index excludes: A. NFTs with <100 items in the collection (like 1 of 1s): too illiquid. B. Music rights, virtual land, game items, etc: focus is on arts & collectibles. The index also screens for liquidity & other issues.

The aim is to make owning the blue-chip NFTs emerging in this historic new category simpler. The fund’s minimum is $25k, lower than many blue-chips. And it handles the complexity of wallets, secure storage, & more.

NFTs are not without risk of course. They’re at the edge of crypto innovation. The market is volatile, liquidity can be challenging, and custody is evolving. It’s not for everyone. But they’re a breakthrough and rapidly becoming prized artifacts of our new digital era.

Over the past 10 years, crypto has created some $2+ trillion in wealth for a digitally native generation. A generation that values NFTs. As the internet era plows ahead, and digital worlds expand, NFTs are on the right side of the future. We’re excited to provide access.

Community Response: Couldn’t find it in the materials but is the fund going to custody the actual NFTs by weight or just track as a synthetic?

We will be buying the actual NFTs, Pirated. Great question.

Great. Appreciate the response.

I have a question: Why to consider Cyberkongz Genesis separated of its collection if they are part of it? It’s like considering Cool Cats Exotics in a different classification.

Genesis Kongz have different mechanics built in compared to babies. Banana yield and subsequently lower supply sets them apart. Exotics are just a rarer cool cat but other than that the contract behind it is the same as all other more common cats.

Translation: “Give us your money. We will pocket a percentage as maintenance fees, and use the rest to buy entries in a clunky database. When people wake up and realize that those entries are worthless, we won’t care, because the loss will be all yours.”

That’s a wildly bad list IMO. Most valuable currently most certainly won’t hold up well. I think a future trend will emerge where funds will hire NFT-native art advisors.

This is a cool idea! Just wondering: my understanding is that bid-ask spreads for NFTs are still pretty wide. If that’s true, wouldn’t rebalancing frequently give up a good chunk of gains?

100 rocks ser. Also if no one is selling there is no floor price, how would your formula handle that?

Perhaps the first index fund, but mutantcats (Mutant Cats DAO) allows people to do the same while actually having ownership and a say in the decision making while also providing gaming experiences and metaverse exposure. Buyacat.

If you’re interested perhaps your fund would like to buy our Vault where we already own these blue chips? https://mutantworld.com/vault And our owners don’t have a 25k dollars minimum or have to be accredited. Yet those high end investors can have a bigger say as a whale voter in the DAO.

If only we didn’t still have 900 ETH in our vault for future purchases, like building out our citizen generating BYTES – Call us if we can provide a consultation.

Here’s what their 3% fee looks like with their min 25K investment, w/ 50% appreciation per year (on average), over 10 yrs. Their fees end up costing you more than 10% of your investment! Not saying don’t invest, just be aware note it will be >10% if you see higher returns.

The Hashmasks are a historically significant NFT project that inspired many on this list. They helped bring in the NFT bull run in January and have an innovative token (NCT) that allows you to change the name of your NFT.

Investors should be fully aware of this fund’s expense ratio of 3%. An expense ratio above 1.5% is considered high, this is twice that. Some consider this is the most risky asset class. You shouldn’t have to pay that much extra to hold a fund in this asset. Wait for a competitor.

NFT index fund sounds like a great thing for those that can’t afford the blue chip prices anymore, but isn’t the whole point to back the right community, and hopefully grow into a blue chip together?