Summary
JL-managed programs and funds will have a brief description on the kind of risk tolerance that ought to characterize a prospective investor who wishes to commit their capital to that particular program or fund. This article summarizes what they are and how they might be useful.
1. Risk-tolerance assessment in mainstream finance.
Established financial institutions have done substantial work in providing general overviews for their clients with regard to investor risk-tolerance profiles and the appropriate asset allocations that may be appropriate for a given risk tolerance across a spectrum generally defined to range from 'conservative' to 'very aggressive'.
For prospective investors unfamiliar with the concept of risk-tolerance profiles, see the following links below:
https://www.investopedia.com/terms/r/risk-profile.asp - basic resource for defining risk profiles.
https://www.fidelity.com/mutual-funds/fidelity-fund-portfolios/overview - very helpful in providing actual diversified portfolio allocations across a spectrum of risk profiles ranging from 'conservative' to 'most aggressive'.
https://microsites.ubs.com/fpt/ch/en/test/01-personal-expectations - a handy self-assessment tool for exploring investor risk tolerance, and generates sample diversified portfolios based on your reported risk tolerance.
The assessment of risk tolerance is only a general indicator, and is only truly put to the test in adverse market conditions. Anecdotally, investors are far more risk averse than their own self-assessment may suggest. Prospective investors are advised to take this into consideration when determining and evaluating their strategy in the highly risky and volatile cryptocurrency context.
2. Risk-tolerance assessment in the cryptocurrency context.
Note that the cryptocurrency space is immature and highly speculative. Any allocation of capital into this space is by definition already at the very high end of mainstream 'aggressive' investor risk profiles; to reiterate, holding 100% BTC is considered a 'conservative' position in the crypto context, but it is already 'very aggressive' from the perspective of mainstream investing.
Prospective investors into cryptocurrency often enter into the space via BTC and quickly discover the alt-coin ecosystem which often promises even greater gains with very little in the way of investment 'friction'; cryptocurrencies by their very nature are very easy to transfer from one to another across global markets. These alt-coins represent an even higher risk-to-reward profile than BTC. Therefore, within the cryptocurrency context, there can be considered to exist a 'spectrum-within-a-spectrum' as far as investor risk-tolerances are concerned.
3. Fund and program offerings across a range of risk tolerances on GV.
When program and fund descriptions make mention of risk profiles, these are only a general suggestion, and their definitions are only loosely held, to provide general guidance for prospective investors. Bearing in mind then, that even a conservative allocation in cryptocurrency represents a 'very aggressive' position from a mainstream finance perspective, the below is provided as a general guide as to how risk profiles might translate in a cryptocurrency context, beginning with most conservative to most aggressive. Where relevant, JL-managed funds and programs will be bolded and linked.
Cash: Stablecoins (e.g., USDT, TUSD, DAI)
Conservative: BTC
Moderately conservative: BTC and top alts; GVBIX Blue-Chip https://genesis.vision/investor/programs/jlp5; Blue-Chip Index Fund https://genesis.vision/investor/funds/jl-indexfive
Balanced: BTC combined with major alts; BlueChip80 - Plus20 https://genesis.vision/investor/programs/jlp6
Balanced growth: Major alts; AltcoinIndex Fund https://genesis.vision/investor/funds/indexten-030-020
Aggressive: Major alts, projects still under development; Hi-Cap Alt Picks https://genesis.vision/investor/funds/cheap-hot-alts-0197; Exchange Sector https://genesis.vision/investor/funds/jlfund10
Very aggressive: Alts with limited liquidity, projects still under development, or otherwise unproven.
Speculative: Selections purely driven by price action; Spec Alt Picks https://genesis.vision/investor/funds/spec-alt-picks
Thanks for reading.
JL
https://genesis.vision/investor/managers/jay-ell
Twitter: @ jay_ell_gv
This blog is not financial advice. This is an independent blog. Please do your own research. You are responsible for your own investment decisions. The views and opinions expressed in this article are those of the author(s), and do not necessarily reflect the views and opinions of Genesis Vision or its affiliates.