If you are already an algorithmic or quant trader, making a switch into cryptocurrencies might seem a natural step.
The problem is getting reliable enough information on the volatile world of cryptocurrencies to run investment policies based solely on number crunching.
Fund management Elpis Investment is offering an option to follow its trading signals on the crypto space as part of a quant-based investment strategy.
Cryptos are a great way to diversify and a great alternative for us says Anatoly Castella, Elpis’ founder and chief executive.
The plan is to run a fund for institutions and a control panel accessible to accredited retail investors who can monitor what the fund is up to.
An automated option is being developed so that a retail portfolio can automatically respond to signals flagged by the Elpis fund.
Castella believes no one else yet is running a hybrid fund containing traditional assets and cryptocurrencies, but with the opening of bitcoins futures in Chicago the market has become more accessible for institutional money.
Elpis so far has focused predominately on US equities, currencies and commodities. The US Equity models consistently beat the S&P since 2008, it says.
Dogs of the Dow
"This model has been tested on the US market and is an improved quantitative version of the 'Dogs of the Dow' trading model.
"The main goal of this strategy is to track the S&P performance, or slightly over-perform the benchmark, with a much lower level of risk."
Institutions who want to add a bit more risk will be able to access the crypto element through a fund that combines both the traditional assets and the new kinds on the block (chain).
Elpis uses artificial intelligence to crunch the data and probability algorithms as the basis of its trading signals.
Bitcoin has been the main focus of the crypto trading so far as it is the oldest and most liquid.
Elpis is also not investing directly rather using CFDs and Bitcoin is the best of the bunch in terms of reliable pricing.
All of the transactions undertaken by the fund will be registered on blockchain adds Castella.