Is the fund regulated by a financial authority?
The fund is registered with The Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten (AFM)). However, because the minimum investment amount is € 100,000 the fund is able to make use of an exception from the prospectus requirement and an exemption of the license requirements. The fund therefore falls outside the supervision of the AFM and the The Dutch Central Bank (DNB). Pursuant to article 2:66a and article 5:3(1)(c) of the Dutch Financial Supervision Act (Wft), no license and no prospectus is required for this activity.
How do I know whether my investment is secure?
The security of the cryptocurrencies under management is one of our primary goals. To protect the large majority of the fund assets from unauthorized access, the cryptocurrencies that together account for up to 80% of the net asset value (NAV) (variances may occur due to value fluctuations) are held in cold storage with two out of three multi-signature. However, although continuous optimization of the security will remain paramount, we cannot be held responsible for the loss or theft of cryptocurrencies of the fund, unless the loss or theft is caused by the gross negligence or wilful default on our part.
Does the fund also actively trade in cryptocurrencies?
A distinction should be made between “trading” and “investing”. The fund operates primarily by what is known as a “buy and hold” strategy, based on the fundamentals over the long-term. The fund does not trade cryptocurrencies over the short term for profit. The fund also does not attempt to “time the market”, nor does it perform any type of margin trading. The fund invests in cryptocurrencies that are expected to increase in value over the long-term; we aim for investing in cryptocurrencies with real merit and a competitive edge. These cryptocurrencies are identified primarily through fundamental analysis, with a focus on the value proposition, which can be defined as identifying any factors that would create a demand for that particular cryptocurrency.
How well is the fund’s portfolio diversified?
Although the portfolio consists of more than a hundred different types of cryptocurrencies, the majority of the fund’s capital is allocated towards the portfolio top ten in terms of market capitalization. Compared to the smaller ones, these cryptocurrencies are all well established with more liquidity and can be considered more secure, stable and reliable. The fund does also invest in the smaller less established cryptocurrencies, for which a strategy of multiple small positions is applied. Also known as the “unicorn” strategy.
What are the risk factors of investing in the fund?
Due to the relatively low overall market value (in comparison to the global financial markets), significant volatility, and high unpredictability of cryptocurrencies, an investment in cryptocurrencies is considered a high-risk investment. Prospective participants should be aware that cryptocurrencies are subject to extreme market fluctuations and other risks inherent in investing in cryptocurrencies. The value of cryptocurrencies and the income derived from them may fall as well as rise and participants may not recover the original amount invested in the fund. Therefore, the fund is only suited for participants who can afford such a high level of risk.
What are the costs?
- 2% annual fixed fee for ongoing charges
The ongoing charges figure (OCF) is the total yearly costs, including the management fee (except for profit share, transaction and redemption fees), The OCF is set as a fixed percentage of 2% over the assets under management (AUM) for the year concerned. The OCF is accrued weekly and charged monthly to the fund.
- 20% annual profit share
Merx Capital is entitled to a profit share of 20% of the total gross yield (after deduction of the fixed fee) above the High Water Mark (HWM). The profit share is charged at the last transaction day of each year, or upon redemption of units
- 2% redemption fee
The 2% redemption fee is charged to discourage short-term, in-and-out trading of units and to compensate the fund for the possible negative effect of redemptions on the net asset value (NAV). The fee will be charged over the net redemption amount (after deduction of the fixed fee and the profit share) upon redemption of units. The redemption fee does not go to Merx Capital, but is credited to the fund assets.
- Transaction fees
Transaction fees of banks, exchanges and blockchains are charged when incurred. Any transaction fee charged when cryptocurrencies are bought, sold or exchanged will be deemed to constitute part of the purchase or sales price. Transaction fees are variable and differ per exchange and blockchain.
How can I participate?
Please sign up to receive the fund documentation for investing in Merx Capital
When and how is the net asset value (NAV) determined?
The NAV is the actual value of the fund, which will be determined weekly on each Wednesday at 13:00 UTC. The NAV is determined by the administrator based on the rates provided by Coin Market Cap. The incurred costs as described in chapter 9 of the prospectus will be taken into consideration for the determination of the NAV.
Can I enter or exit the fund at any moment of my choosing?
The fund will in principle issue and redeem units every Wednesday at 13:00 UTC, at the request of (prospective) participants, unless the NAV calculation is suspended or the prospectus provides otherwise. Requests for the issue and redemption of units need to be received by the administrator at least one calendar week prior to the intended transaction day. Only requests received before Wednesday 13:00 UTC will be executed the following Wednesday, based on the established NAV on that day at 13:00 UTC.
What is the minimum subscription amount?
The minimum subscription amount is € 100,000. The minimum of subsequent subscription amounts is € 5,000. The total invested amount per participant may never be less than € 100,000 (excluding decrease in value).
What is the minimum redemption amount?
The minimum amount for which units may be redeemed is € 5,000. Fractions of units may be redeemed up to four (4) decimals. Any redemption may not cause the remaining invested amount to be less than € 100,000, as the total invested amount per participant may never be less than € 100,000 (excluding decrease in value due to market price decrease).
What taxes do I need to pay over my participation?
As a result of tax transparency, the fund is not subject to Dutch corporate income tax. All of the fund’s income and capital gains are therefore attributed to the participants as if they were investing directly in the underlying fund assets. A Dutch natural person holding units in the fund is generally subject to Dutch personal income tax in ‘Box 3’, provided that the units are held as a private investment and are not part of a personal enterprise subject to Dutch personal income tax in ‘Box 1’, i.e. a sole proprietorship. Dutch legal entities participating in the Fund, such as a limited liability company, are taxed in The Netherlands for all income and capital gains obtained from the participation.
Where can I see the current status of my investment?
At least once a week we publish the gross yield on this website. Furthermore, participants have access to their private and secure environment on this website, where the following information will be available:
- Number of outstanding Units per Participation
- Net asset value and Unit Price per participation (updated weekly)
- Transaction overview
- Personal fiscal year report
- Fund’s annual report
Can I resell my participation?
No, units can only be sold back to the fund (upon redemption) and can therefore not be transferred to third parties.