Invest In NFTs The Easy Way
A fund invests in valuable assets with the aim that overtime, these assets will increase in value. It could invest in real estate, stocks, start ups, cryptocurrency, etc.
Cryptocurrency funds have been around for a few years, and now we have NFT funds.
What Is An NFT Fund?
Think of an NFT fund as an ETF. They invest in a basket of NFTs and NFT-focused businesses.
NFT funds are actively managed, with the prime aim of increasing in value and making their investors money.
What Do NFT Funds Invest In?
This depends on the fund, but usually, an NFT fund wants to gain exposure to the entire NFT industry.
NFT funds typically invest in NFT collectibles, Top-tier bluechip NFT collections like BAYC, NFT platforms, protocols, Ai, royalty streams, gaming assets, start-ups, and more.
Some funds like Sfermion specialize in metaverse investing. They invest in metaverse start-ups, companies, tokens, NFTs, and protocols.
Some funds actively trade NFTs, as well as hold certain ones for the long term. A combination of short and long-term investing.
How Do NFT Funds Analyse NFT Collection?
Funds are looking for the best of the best. NFT collections that will not only survive but increase in value over time. Funds analyse rarity and scarcity.
Some funds use machine learning to formulate a fair entry price and valuation for an NFT by studying the NFT’s price history and blockchain data.
Why Invest In An NFT Fund?
The idea behind a fund is it hedges risk as they invest in a basket of NFTs and businesses. They diversify their NFT investment portfolio to weather a bear market and profit from a bull market.
- Funds also help traditional institutional capital (that wants exposure to this asset class) flow into the NFT market.
- Individual high-net-worth investors may not understand NFTs or have time to manage a portfolio and prefer to invest in a fund that does the work for them. When the fund profits, so do investors.
- Fund investors gain exposure to multiple NFT artists and collections without having to own the underlying assets. This is hassle-free NFT investing (if you invest in a competent fund) without the risk of having to hold NFTs in a digital wallet.
What Are The Risks?
The NFT investing sector is not regulated.
It is possible that the SEC could fine or close down some funds in the future.
Presently, funds have near zero accountability to government entities. This means you invest at your own risk, and potentially funds could disappear overnight.
The good news is there are some well-run NFT funds if you do your research. In the future, NFT funds should become regulated. At this point, we might see a flood of institutional and high-net-worth capital flow into the top NFT funds.
You will need to decide if it is currently safer to invest in NFTs directly yourself as opposed to trusting an NFT fund.
This article was written to be informative only and we do not recommend any funds, nor are we associated in any way to a fund.
You can read more articles about NFTs in the blog section of our website.
You can also visit our NFT resource directory to find useful links to help you invest in NFT more effectively.
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All information in this article is for educational purposes only.