In this post, I will provide members with an update on the performance of the Collective Shifts Long-Term-Growth (‘LTG‘) Portfolio and provide insights into how the portfolio was constructed.
Portfolio Performance
The LTG Portfolio has shown resilience during this winter’s crypto downturn. At the time of writing, the LTG has a total return of -13.62%. The return of the LTG is over 19 percentage points better than the -32.62% return of BTC over the same period. The superior returns of the LTG result from a combination of asset selection and allocation strategy.
Asset Selection and Allocation
As a reminder, the LTG Portfolio is a pseudo passively managed, long-only, spot portfolio that aims to outperform Bitcoin over a five year holding period.
Assets for the LTG Portfolio were selected by our research analysts based on the ability of a token to accrue value and the long-term outlook of the underlying protocol or blockchain. Initially, 12 assets were selected covering BTC, Layer 1 Tokens, DeFi Tokens, and Data Management tokens. As crypto continues to develop, our research team will be responsible for selecting and allocating new tokens which meet our long term investment criteria.
As a company, we determined asset allocations using a hierarchical risk parity machine learning strategy that allowed us to select optimal asset weightings to maximise rewards versus volatility algorithmically. The algorithmic allocation strategy is unique compared to other passively managed crypto asset portfolios. The unique allocations strategy is likely why the LTG Portfolio has superior returns (-13.62%) versus BTC (-32.92%), the DeFi Pulse Index (-36.32%) and the Bankless Bed Index (-32%) based on prices from CoinGecko.
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