An investment company is a company that invests pooled assets in securities. Some of the biggest financial services companies are investment companies. Major players them include Vanguard, Fidelity and Charles Schwab. Heres how these companies operate and how they can work for you.

Investment Company Defined

Mutual funds are the most common and familiar type of investment company. Like other types of investment companies, mutual funds collect money from investors. Then invest the combined capital into securities.

The securities owned by a mutual fund or other investment company are its portfolio. When an investor buys a share of an investment company, it represents part ownership of the portfolio.

If the values of the securities that make up the portfolio increase, so does the value of the shares held by investors. If the portfolio generates income through dividend or interest payments, investors receive a portion of that income.

Shares of investment companies such as mutual funds are part of most investment portfolios. That includes individual brokerage accounts as well as retirement accounts such as IRAs and company-sponsored 401(k) plans.

Some of the biggest financial services companies are investment companies. Major players among investment companies include Vanguard, Fidelity and Charles Schwab. The biggest investment companies oversee portfolios with assets worth trillions of dollars.

Investment Company Features

Investment companies offer investors a number of benefits compared to investing alone. For one thing, by combining funds from many individuals, investment companies are able to hire professional managers to select the securities to purchase.

Also, investment companies created a large quantity of money from pooled individual investments. As a result, investment companies can invest in many more companies and types of investments than the individuals could on their own. A single investment company may purchase stocks, bonds and other types of securities issued by hundreds or even thousands of companies in many different industries. This level of diversification helps reduce risk significantly.

The Securities and Exchange Commission (SEC) regulates and defines investment companies under the federal Investment Company Act of 1940. They are also subject to the federal securities acts passed in 1933 and 1934. These rules require, among other things, significant disclosure of the terms investors are agreeing to and the claims the investment company is making.

Most investment companies also provide other services in addition to investment management. Added services include holding securities as custodians for investors, keeping records, handling accounting, managing taxes and seeing to legal requirements.

Investment Company Types

In addition to mutual funds, the Investment Company Act of 1940 recognizes two other types of investment companies. These are closed-end funds and unit investment trusts. Here are differences among these three:

Under these three headings, there are many varieties of investment companies. These types include stock funds, bond funds, hybrid funds, money market funds, target funds and index funds.

Hedge funds are another investment vehicle that pools funds from many investors. However, with fewer than 100 investors, hedge funds fall short of the investment company designation under the 1940 act. That means, among other things that they dont have the same disclosure requirements.

The Bottom Line

Story continues

Investment companies are the most popular way for people to invest in the securities markets. They include mutual funds, closed-end funds and UITs. Regulations governing investment companies protect investors from misleading information and fraud. And by pooling their assets, investors get the benefits of diversification and professional management.

Investment Tips

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What is an Investment Company? - Yahoo Finance

125 Greenwich Street (Credit: 125 Greenwich, iStock)

A SoftBank-owned investment firm has purchased the defaulted mortgage on the troubled luxury condo tower 125 Greenwich Street.

Fortress Investment Group bought the mortgage for about $230 million from the investment firm BH3, according to the Wall Street Journal. BH3 had been moving to foreclose on the 88-story project, which is under construction but nearly complete. Fortress will have the right to continue the foreclosure lawsuit if it chooses.

The developers Howard Lorbers New Valley, Davide Bizzis Bizzi & Partners, the Carlton Group and China Cindat defaulted on the loan as the market for high-end apartments in New York began to weaken. A group of lenders including United Overseas Bank filed to foreclose on the project last year, but BH3 ended up buying the loan for about $125 million in July.

Manhattan is dealing with a glut of luxury condos thanks to a surge in new construction, which has given investors an opportunity to bail developers out at high interest rates, purchase defaulted loans or take over projects that are not doing well for low prices.

BH3 co-founder Daniel Lebensohn told the Journal he would not expect Fortress to slow down the foreclosure process on the tower. [WSJ] Eddie Small

Read more:
Fortress buys debt on troubled 125 Greenwich - The Real Deal

Strong population growth combined with rapid urbanisation support the case for investing in Africa, says Paul Boynton, CEO of Old Mutual Alternative Investments (OMAI). The continents large natural resource endowment is another one. But there are more, according to Boynton. Over the next decades, the growth opportunity within Africa must be as strong as anywhere else.

Given Africas under-developed public markets, there is a case for investing in infrastructure and private equity, those on which OMAI focuses.

OMAI is part of Old Mutuals Wealth and Investments, a key division of the financial services group. The firm offers both funds and segregated accounts with a pan-African focus. Half of the investors within its pan-African funds are international.

Growing the international client base is among the companys strategic priorities, which is why OMAI hired a London-based professional, Clodagh Bourke, who will focus on that task. Bourke joined from Barings, where she was a director in its alternative investments business.

There cannot be many firms with such a deep presence across African private markets. OMAIs infrastructure arm, African Infrastructure Investment Managers (AIIM), has invested for two decades. It was established in 2000 as a 50/50 joint venture between Old Mutual and Macquarie, but Old Mutual took full control in 2015. AIIMs investments include transport, energy and telecommunications.

In private equity, OMAIs buyout and growth capital fund, which is focused on Southern Africa, is currently launching its fifth vintage. The firm also manages private equity fund-of-funds portfolios, investing either globally or pan-African.

OMAI is also an impact investor. Although focused on South Africa, Boynton says it is looking to take its impact capabilities to East Africa. The firm manages an affordable housing fund, has funded alternative mortgage providers and a retirement accommodation programme.

European infrastructure investors lamenting the lack of domestic opportunities might ponder the potential that Africa offers. According to the African Development Bank, Africa needs investment of $130bn (120bn) to $170bn per year to close its infrastructure gap, but governments and supernational agencies can only cover about half of that. The rest has to come from the private sector.

Boynton says: If you consider the Nigerian power grid, for instance, it is one tenth the capacity of the South African grid, and Nigeria has nearly 200m people, compared with South Africas 60m. Often power in Nigeria is generated by diesel generators, at four times the cost of on-grid power. There is an opportunity to build utility-scale power plants and hook them up to the grid, reducing the cost of industrial and residential use by 75%.

At a political level, one recent event plays in investors favour. The agreement establishing the African Continental Free Trade Area (AfCFTA) came into force in May 2019, providing the framework for reduced trade friction. Intra-African trade is in the mid-teens [as a percentage of total African trade], much lower than intra-European trade for instance. There is a big opportunity to build continental value chains and promote trade, and this is also dependent on infrastructure and logistics, says Boynton.

Investment in private equity stands to benefit from the African consumer, but the viable investment opportunities will have a pan-African focus, according to Boynton. There is appetite from multinationals to make strategic acquisitions with a pan-African footprint. They see that Africa could become a large source of consumer demand over the next decades and they want to participate in that.

We have invested in businesses that have the ability and the potential to develop across Africa and helped them execute that strategy. As an example, we have invested in a glass bottle business that has opened a plant in Ethiopia, a country of 80m people, growing at nearly 10%. Historically, all glass bottles were imported, until this business opened a plant in the country. Now they are looking to expand in Kenya and West Africa. Before we invested, they did not have a pan-African presence.

So what is putting off investors from African private markets? Boynton says: Unfortunately, private equity returns over the last decade have been quite pedestrian, given the perceived risk premium that investors feel they should be receiving. I would argue, however, that risk in Africa is perceived to be a lot higher than it actually is.

At the same time, the size of funds that have been raised is generally small. Very few have exceeded $1bn in size, which might be too small for large European institutional investors. I think that is changing, too.

Despite the higher risk premium, real or perceived, the discipline of investing in African private markets is the same as for other markets, according to Boynton. He says: When investing in infrastructure, we have to assess the jurisdictional risk of investing in each country. Even within a country, we might find areas where we are happy to invest and those where we are not. In certain areas, we might also look at taking out insurance on things like expropriation or inability to expatriate capital.

But at the end of the day, the process is not different. You need to assess all the risks, from the credibility of the operator to the quality of the developers balance sheet.

A presence on the ground gives OMAI credibility. We have investment professionals in offices in key cities including Abidjan, Lagos, Nairobi as well as Cape Town and Johannesburg. This is important not just for risk assessment, but also mitigation.

If investors are concerned with environmental, social and governance (ESG) issues, they need to know that it is not new to Africa, thanks to the historical involvement of development finance institutions in infrastructure and private equity, Boynton points out. OMAI has developed an ESG strategy linked to the UNs Sustainable Development Goals (SDGs).

We have selected 12 SDGs on which we believe we can make adifference. As part of those, we have identified 90 different potential metrics that can be measured, fromwater consumption to carbon avoidance. That allows us to make longitudinal as well as cross-sectional comparisons.

More here:
Strategically speaking: Old Mutual Alternative Investment | Interviews | IPE - IPE.com

Today well evaluate International Business Machines Corporation (NYSE:IBM) to determine whether it could have potential as an investment idea. To be precise, well consider its Return On Capital Employed (ROCE), as that will inform our view of the quality of the business.

First, well go over how we calculate ROCE. Second, well look at its ROCE compared to similar companies. Last but not least, well look at what impact its current liabilities have on its ROCE.

ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. Generally speaking a higher ROCE is better. In brief, it is a useful tool, but it is not without drawbacks. Renowned investment researcher Michael Mauboussin has suggested that a high ROCE can indicate that one dollar invested in the company generates value of more than one dollar.

The formula for calculating the return on capital employed is:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) (Total Assets Current Liabilities)

Or for International Business Machines:

0.094 = US$11b (US$152b US$38b) (Based on the trailing twelve months to December 2019.)

Therefore, International Business Machines has an ROCE of 9.4%.

Check out our latest analysis for International Business Machines

ROCE is commonly used for comparing the performance of similar businesses. Using our data, International Business Machiness ROCE appears to be around the 12% average of the IT industry. Setting aside the industry comparison for now, International Business Machiness ROCE is mediocre in absolute terms, considering the risk of investing in stocks versus the safety of a bank account. It is possible that there are more rewarding investments out there.

International Business Machiness current ROCE of 9.4% is lower than 3 years ago, when the company reported a 17% ROCE. Therefore we wonder if the company is facing new headwinds. The image below shows how International Business Machiness ROCE compares to its industry, and you can click it to see more detail on its past growth.

It is important to remember that ROCE shows past performance, and is not necessarily predictive. Companies in cyclical industries can be difficult to understand using ROCE, as returns typically look high during boom times, and low during busts. ROCE is only a point-in-time measure. Future performance is what matters, and you can see analyst predictions in our free report on analyst forecasts for the company.

Current liabilities are short term bills and invoices that need to be paid in 12 months or less. Due to the way ROCE is calculated, a high level of current liabilities makes a company look as though it has less capital employed, and thus can (sometimes unfairly) boost the ROCE. To counter this, investors can check if a company has high current liabilities relative to total assets.

International Business Machines has current liabilities of US$38b and total assets of US$152b. As a result, its current liabilities are equal to approximately 25% of its total assets. This very reasonable level of current liabilities would not boost the ROCE by much.

With that in mind, were not overly impressed with International Business Machiness ROCE, so it may not be the most appealing prospect. You might be able to find a better investment than International Business Machines. If you want a selection of possible winners, check out this free list of interesting companies that trade on a P/E below 20 (but have proven they can grow earnings).

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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What We Think Of International Business Machines Corporations (NYSE:IBM) Investment Potential - Simply Wall St

If you want to be an entrepreneur, the rarest ingredient is having the constitution to endure.

Company ideas are commodities, and todays best practices and the support infrastructure have become ubiquitous. Of the obstacles that do persist, information scarcity isnt one for entrepreneurs.

That isnt quite so if you want to be an early-stage investor.

Where an overdue and fierce battle for increasing representation among entrepreneurs is alive and well, private market investing remains a particularly clubby boys club of finance. The rules and advice and deals remain cloistered.

Thats why we at Technical.ly, with the support of Project Entrepreneur, a program sponsored by UBS, piloted Off the Sidelines, an angel investor education podcast. Over the last three months, we put out an initial season that outlines the framework of assessing early-stage investing as an asset class.

Private market investing has surged in the decade of growth that has followed the Great Recession. Worldwide, private equity and private debt, which includes venture capital and a tiny sliver of individual angel investing, grew by 44% in the five years ending in 2019, as reported by The Economist last month.

This can be a point for alarm, as frothy valuations follow idle cash and presage peril. But inside this growth has been a glimmer of change: Nearly a quarter of the 200,000 angel investors in the United States are women and 30% of those who made their first investment in the last two years were women, as of 2017.

If we want growth segments of our economy to benefit Americans with different backgrounds, change must come with the entrepreneurs and those making financial bets on those entrepreneurs. In truth, they relate.

Its with this in mind that we produced 10 episodes speaking to early-stage investors about their own journey and advice to getting into venture capital. Broadly, there are three pathways to early-stage company investing: doing it yourself as an accredited investor, contributing to a new fund from a venture capital firm or working at an investment firm.

All three have similarities, but for this season of Off the Sidelines, we focused on those interested in doing this themselves. Across interviews, there were many common themes. For one, all interviews cautioned against seeing startup investing as a vehicle to maximize financial returns, particularly as you begin this career. Your money turns illiquid and in a highly volatile category. Instead, active investors will advise you to focus on a contrarian worldview you have and see this as act of creation to contribute to that future.

If youre a high net worth individual, or aspire to be, here are some important takeaways to inform your early investing approach:

In Episode One, Village Capital cofounder Victoria Fram told us that early-stage investing is humbling. Even the best prepared investors will get things wrong. Its best to give your predictions time bounds, and hold yourself to it. That includes investing itself. You have to enjoy the work of it.

In Episode Two, Alicia Syrett of Pantegrion Capital told us that investors can have different relationships with the companies in which they invest. It depends on your strengths, and the needs of your portfolio. Do you want to have regular check-ins to debrief and discuss in depth, or are you strategically valuable for specific needs at different intervals? Be wary of either extreme distant dumb money or a micro-managing backseat driver but theres considerable range in between.

In Episode Three, Angela Lee of 37 Angels, which runs an angel investor bootcamp series, told us that new investors will sometimes linger on a response to an entrepreneurs pitch. This helps no one. She champions being transparent, upfront and clear. Develop a good sense of your interests and priorities. Move forward or dont, but whichever direction, be direct.

In Episode Four, Kesha Cash of Impact America Fund told us about the importance of subject matter expertise, and a view for a future that is different than most others. Her focus on shadow economies is an example of her belief that underrepresented corners of the economy will be best served by entrepreneurs who come from those same corners. Cash represented a common theme, that issues of representation can be a savvy investment thesis, not purely a philanthropic mission.

In Episode Five, Henri Pierre-Jacques of Harlem Capital told us about his thorough approach to due diligence, with a heavy reliance on industry trends. A common theme among early-stage investors is those who are data-first and others who are founder-first. Anyone will you tell you that you need both: A firm handle on the business and sector realities and a good gut for whether the team youre investing in can navigate the changes that will surely come.

In Episode Six, David Hall of Revolution told us that early-stage investors should have a strong stance on how they hope to impact the world, beyond a financial gain. All investors will remind you that it is unlikely youll have a strong financial showing quickly. Its important to have other priorities, like boosting the kinds of founders you want to see, or attacking an industry you believe to be weak or solving a big problem you think is being underserved. This helps make the case alongside your early middling returns.

In Episode Seven, Astrid Scholz of Zebras Unite and XXcelerate Fund told us that its important to understand how the existing infrastructure of investing operations works but you ought not settle for that reality. By making bets on what will come next, investors bend, however slightly, the direction of that future. Your dollars, then, contribute to how the world operates. Make sure youre contributing to something you want to see.

In Episode Eight, Josh Kopelman of First Round Capital told us angel investing begins as a learning adventure. To succeed, youll need a specialization, and that likely will mean you have unique access to buyers, industry trends or the best founders. As he put it, investors should always question: If Im being offered an opportunity, is it because they think I am the smartest person on the planet, or the dumbest?

In Episode Nine, Linnea Roberts and Ita Ekpoudom of GingerBread Capital told us about the approach theyre developing after their years of investment banking. One element is about picking your team and sticking with those in whom you believe. It started when Roberts contrasted the advancement of women in the finance sector, shy of the highest leadership roles, but saw less of it among founders. It became an investment thesis: To expect a world of more female leadership, they wanted to bet on more female founders. You ought to have your own.

In Episode 10, Tracy Chadwell of 1843 Capital told us that this is a true process. Just as an individual startup investment could have a five-year, or even 10-year, horizon, you must approach your developing an angel investing practice as an investment itself. It will take time. Set a goal of writing one check. De-risk it however you can. Trust yourself.

###

One reminder we made every episode is that angel investing is risky. Accredited investors are granted no crystal ball. Even most professional venture capital firms do not generate enough returns to justify their risk. You ought to be getting involved for other reasons than a financial return.

But how do you start? Attend startup pitch events. Buy lunch for an entrepreneur and talk through their worldview and approach. Angela Lees episode is a particularly good beginning, given that she teaches at Columbia University and offers an angel investor bootcamp via her 37 Angels.

With so much less learning available, were happy to offer you a starting point on this road to angel investing.

Visit link:
Here's what you need to know to start your angel investing career - Technical.ly

February was a chaotic month for equity markets, with the Dow Industrial Average and S&P 500 Index each dropping around 12% in the last week of the month alone. Fears around the coronavirus drove selling, as concerns over the outbreak led investors to seek the relative safety of bonds and other fixed-income investments.

3d illustration of mobile phone over white background with electronic circuit and bank card

Some hedge funds managed to buck the trend. One of these is Clearfield Capital, a New York-based special situations fund started by Phil Hilal in 2015. The $300 million fund was up 7.5% last month thanks in large part to investments in a pair of payment processors, according to an individual with knowledge of the matter. The companies are Paris-based Ingenico Group and Milan-based Nexi S.p.A., which had its initial public offering last year.

Shares of Ingenico, which trades over-the-counter in the U.S. under ticker INGIY, gained about 20% in February, even after dropping from their highs in the sell-off last week. A new management team has accelerated the growth rate of Ingenicos payments-processing business and Clearfield portfolio managers anticipate an eventual divestment of the slower-growth equipment business.

Nexi, which trades on the Milan stock exchange, was up about 10% in February. The Italian company has gained about 75% since its April IPO. Nexi has significant opportunities to optimize its cost structure as well as to acquire Italian assets that would be accretive to its earnings per share, said the person familiar.

Clearfield is now up 12% the first two months of the year, following gains of 35% in 2019. The fund also benefited from a pair of long positions in U.S. stocks this year: TransDigm Group (TDG), a Cleveland-based aerospace components manufacturer, and Motorola Solutions (MSI). It is also short a few names in the industrials sector.

Excerpt from:
Clearfield Capital Hedge Fund Gains 7.5% In February On Investments In European Payment Processors - Forbes

The lithium industry is highly complex, and it needs very deep technical knowledge and huge reserves to try to develop, and this is partly why it has never really got off the ground in Bolivia, said Eileen Gavin.

Making up one third of the so-called lithium triangle, the Andean nation of Bolivia is estimated to have around nine million metric tons of lithium the largest accumulation in the world, according to the US Geological Survey.

Due to the expected exponential growth in demand for battery technology in recent years, of which lithium is a component, interest in Bolivias untapped reserves has skyrocketed. However, unlike neighbouring countries Argentina and Chile, which both have lithium mines in production, efforts to develop these resources have so far amounted to little.

The now exiled former President, Evo Morales, who was a keen proponent of resource nationalism, had tried to kick-start a local lithium industry via a state-owned company and joint partnerships with foreign firms, but he faced public opposition and lack of local expertise. Now he is exiled and elections are planned for May, many are asking whether political stability can be returned to the land-locked South American state and, if so, what approach might Morales successor take to exploiting the countrys lithium riches?

Bolivias abundant lithium reserves are mostly located within the countrys spectacular salt flats, called the Salar de Uyuni. The area, which is popular with tourists, is home to the largest salt flats in the world.

There were plans agreed by a privately-owned German firm called ACI Systems Alemania (ACISA) and Bolivias state-owned lithium company, YLB, to develop a lithium mine in the region. However, these had resulted in widespread protests as locals said the agreement to build a mine, an electric vehicle battery factory and a lithium hydroxide plant did not deliver enough local benefits. Eventually, the project was shelved.

YLB has also signed an agreement with a Chinese consortium, Xinjiang TBEA Group Co Ltd, for a new $2.3bn lithium project. The company, which beat six others to secure the deal, including Irish and Russian firms, intends to produce lithium and other materials from the Coipasa and Pastos Grandes salt flats following feasibility studies.

At the time, Morales said the government had gone with China over the others because the country has the worlds biggest demand for lithium.

However, the deal, inked in February 2019, will likely be subject to the cooperation of the next administration, whoever that may be. And what stance they will take towards development will be key in whether the agreement moves forward or not.

The new interim chief of YLB, Juan Carlos Zuleta, has already said, as reported by Reuters, the firm plans to place strict limits on foreign investment in extraction of lithium.

It is important for the international community to know that Bolivian law says lithium should be extracted and processed by Bolivians, he said in January.

Zuleta also reiterated that the deal with ACISA would remain shelved and the Chinese one is to be reassessed. He added that rather than look to outside expertise, Bolivia would look to strengthen local know-how.

While Morales, like Zuelta, was a proponent of resource nationalism, he was to a lesser extent than other socialists in the region, such as Venezuelas Nicols Maduro, says Eileen Gavin, principal analyst at Verisk Maplecroft

Morales was willing to involve the private sector in participation with the state, that was the idea in 2008 when he set up a state lithium company, she says.

Given the recent protests and with the upcoming elections, its likely the development of lithium will continue to be further politicised and debated. In reality, despite Zueltas statements, what happens next will largely depend on who wins these elections, presuming they are deemed fair and legitimate and are not a catalyst for further political unrest.

Morales Movement for Socialism (MAS), the leading political faction in Bolivia, has two main opponents: Carlos Mesa for the Citizen Community centrist coalition, a former president, and the leader of the civic leaders at the head of Santa Cruz, the traditional right-wing faction, Luis Fernando Camacho Vaca.

Despite MAS being the largest political movement in the country, due to clear signs of public disillusionment with Morales in recent years, the outcome of the election is difficult to predict, says Gavin. However, Carlos Mesa, the centre ground candidate, would probably be the most appealing to foreign investors.

He would be seen by investors as steadier and more investor friendly, says Gavin.

Nevertheless, she adds that, whichever party wins power, they will likely continue to look to China for foreign direct investment rather than the west, because China is already an established source of investment in the region and has a stronger risk appetite.

As well as political wrangling and social opposition to mining, which is par for the course for any Andean country, Bolivias lithium reserves face technical challenges to extraction.

The lithium industry is highly complex, and it needs very deep technical knowledge and huge reserves to try to develop, and this is partly why it has never really got off the ground in Bolivia, says Gavin.

The lithium in Bolivian salt flats is not as dry and contains more magnesium and potassium than in neighbouring Chile and Argentina, which makes the extraction process complicated and costly. Furthermore, the higher rainfall and cooler climate mean the evaporation rate is much slower. Add to this the fact that Bolivia is landlocked and therefore the mineral will be harder to move for export, as well as the ongoing political unrest, its reserves are likely to be deemed much less competitive than neighbouring Chile and Argentina.

For example, in comparison to Bolivia, Chile started exploiting its lithium reserves over 20 years ago, and therefore will be a more obvious and less risky choice for foreign investors.

Chile was seen until recently [the country is facing its own political challenges] as the more stable, investor-friendly country, with up-to-date institutions and mining and legal frameworks; in Bolivia this all needs to be developed, says Gavin.

Yes, the demand for lithium is huge all over the world, but the Bolivian sector poses a huge challenge. While on paper, Bolivia has all this potential, unlocking it and getting it to market will take up to twenty years and require serious private investment, says Gavin.

The world will be watching in May as Bolivians take to the polls. The outcome will be the first step in moving the development of the countrys strategically important lithium reserves to the next stage. But given the technical challenges and strong civil interest, its going to be a challenge for any new government to kick start development while keeping all stakeholders happy.

Read the original post:
Bolivia: will the ousting of Morales open lithium to foreign investment? - Mining Technology

This week as equities markets plummeted across the globe, Bitcoin (BTC) price also faced a sharp correction. Over the past week Bitcoin price has dropped $1,500 and currently trades at $8,454, a new four week low.

Since the start of the year Bitcoin and most major altcoins showed an impressive gain in price, leading analysts to suggest that a bull-run was brewing for 2020, an idea now being challenged by the current pull-back.

As has been the norm, on one side, there are bullish enthusiasts aiming for sky-high valuations; on the other, there are more conservative analysts raising questions about the viability of crypto. The large swings and explosive behavior of the crypto market is what makes them an attractive investment option when compared to other assets but the indecisiveness of the current market is also forcing investors to expand their strategies and adjust them frequently.

Cryptocurrency market weekly overview. Source: Coin360

One strategy based on this underlying rationale is momentum investing. As a refresher: A momentum strategy consists of analyzing daily returns for an asset (e.g. cryptocurrencies, stocks, indexes, etc) and allocating the worst and the best performers into baskets.

The strategy is found to be lucrative in traditional markets where investors buy the best-performing baskets and sell (short) the worst performing baskets or to put simply, they are bullish on the past winners and pessimistic regarding the past losers.

As a variation from the original strategy, an individual asset can be chosen as the best/worst performing asset that day instead of investing in baskets. Following this method, an investor would retrieve daily data for the best and worst performing asset, hold it for 1 day then sell for a profit on the following day.

As previously reported by Cointelegraph, research on cryptocurrency price action found that applying a momentum strategy to the top-20 currencies in the market was profitable if an investor bought the best performing currency instead of the worst performing currency each day.

By expanding the sample to the top-50 currencies in the market, investors can explore even larger swings from lower market-capped coins that can offer investors a higher return but also expose one to a higher risk level.

After identifying the daily winners and losers from the top-50, we assume that an investor holds each crypto for 1 day - buys its closing price that day and sells it the following day at the closing price.

Surprisingly, investors employing this strategy daily from January 1, 2019 to February 23, 2020, would generate a profit instead by buying the worst-performing currency this is opposite to traditional markets. An investor would have achieved a cumulative return of 367% by buying the worst-performing cryptocurrencies (buying the losers) throughout this period.

However, when accounting for a transaction cost of 0.1%, in order to reflect a real investment scenario, the cumulative returns of this strategy are reduced to 284%. On the other side of this strategy, an investor who buys the best performing cryptocurrencies and sells them the following day gets a high negative return for this period - the opposite result to what is found in stocks.

From an annualized Sharpe ratio perspective, meaning, the return an investor gets for its risk exposure, the buying the losers strategy offers a great option as the Sharpe ratio is 1.78 when no transaction costs are considered. When those come into play, naturally, the Sharpe ratio reduces to 1.22. A Sharpe ratio under 1 is considering sub-par, while over 1 it is considered a reasonable outcome.

As seen in the top-20 scenario, Bitcoin, Ether (ETH), XRP, Bitcoin Cash (BCH) and Binance Coin (BNB) rarely appear as the daily worst-performing cryptos. Smaller cryptocurrencies such as Synthetix Network Token (SNX) are very volatile and appeared more than 40 times as the worst and the best-performing crypto on different days.

Additionally, during this period observed, Crypto.com Coin (CRO) and Bitcoin Diamond (BCD) follow as the ones with most negative appearances 32 and 23 times, respectively.

Looking at the first month and a half of 2020, an investor employing the buying the losers strategy during this period would have generated a cumulative return of 160% (no costs) and of 150% when accounting for the aforementioned transaction rate.

From a risk-adjusted performance perspective, buying the losers strategy offers a great alternative for investors with a Sharpe ratio of 3.95 (no transaction costs) and a Sharpe ratio of 3.25 when accounting for the transaction costs.

During the last 7 days of this analysis, to incorporate the recent market reactions, we found that the strategy yielded a very low cumulative return of 0.66% when transaction costs were not considered. When accounting for the transaction rate, the cumulative return becomes negative at -0.74%.

Underlying market shifts like the increasing liquidity of top coins mitigates some of the risks involved with momentum investing. However, as happens with smaller capped cryptocurrencies, liquidity issues may still arise from employing this type of strategy as some of the currencies in the analysis may not generate sufficient buy or sell volume for investors to easily enter and exit positions.

Looking forward, expanding the momentum strategy to the top-50 cryptocurrencies gives investors a greater cumulative return and better risk-adjusted-performance. Moreover, the swings at the start of the year still make an attractive option for the future backed by consistent returns over different periods. However, investors should be aware that the best strategy may vary from time to time and adjust accordingly as we have seen from the last 7 days shift.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

See the article here:
Bitcoin Momentum Investing Does Buy the Dump, Sell the Pump Work? - Cointelegraph

INVEST kickoff 2019

Join us forMedCity INVEST ChicagoApril 21-22 at the Ritz Carlton. Youll hear dozens of healthcare experts discuss the latest investing trends and watch as more than 40 startup finalists screened from a large pool of applicants pitch live on stage to investor judges.

Well be discussing the hottest topics, including:

A panel will spotlight trends in Midwestern innovation from BioEnterprises 2019 Healthcare Growth Capital Report, how startups in the Midwest face unique challenges and opportunities when it comes to attracting growth capital. The panel will discuss future trends impacting investment in this region.

Plus, well feature a reverse pitch, where hospitals state their problems that need solving and startups pitch their answers. See agenda.

Weve extended our early ratetheres still time to save $300 on your ticket. Register by Friday March 6 to save $300. Click here to register.

Over 400 venture capitalists, hospital leaders, influential healthcare execs and tech entrepreneurs attend. Join organizations that include American Medical Association, Arboretum Ventures, Baird Capital, Cultivation Capital, Geisinger Health, Houston Methodist, Mayo Clinic, Providence St. Joseph and many more. Hurry, price goes up soon. Register today.

Link:
MedCity INVEST: Where healthcare startups and investors connect - MedCity News

You have exactly four weeks to finalize your tax-saving investments. In case you forgot, this is the first week of March, and you have to make your investments before 31 March to claim tax deductions on them in this financial year. Oh, we are talking about Section 80C here. As you would know, Section 80C of the Income Tax Act allows tax deductions of up to Rs 1.5 lakh on certain investments. The section offers a wide range of investment options such as Public Provident Fund (PPF) , National Saving Certificate, Equity Linked Saving Scheme (ELSS), five-year tax-saving fixed deposits, just to name a few favorites.

Okay, if you are wondering why we are talking about tax-saving investments in the first week on the last month of the financial year, here is the scoop: many taxpayers love to do the running around to take care of their tax planning only in the last three months for the financial year. A sizable chunk among them love to postpone it to the last month of the financial year. Some tough ones think about it only on the last week.

Yes, it is always better to start your tax planning at the beginning of the financial year. Be it PPF or ELSS, you can invest regularly in them and claim tax deductions on your investments under Section 80C at the end of the financial year. This strategy imparts financial discipline and it will help you to organise your finances better. Also, you would invest the money in the right tax-saving option.

The right tax-saving option is something most taxpayers are always looking for. However, only a few manage to invest in the right one. Most individuals, especially those who wait for the last-minute, often choose the easy option due to paucity of time and inertia. Sometimes, they just choose the one recommended by friends or colleagues. Here is an easy way out. All you need is basic commonsense to crack it.

First, find out how much you need to invest to exhaust the tax deduction limit of Rs 1.5 lakh under Section 80C. Most individuals have an EPF (employee's provident fund) account and life insurance premium that are covered under Section 80C. Deduct the amount from Rs 1.5 lakh to find out how much you need to invest extra to exhaust Section 80C limit. Once you know the figure, we will start the process of choosing the right investment option for you.

Okay, you want to save taxes, but how long do you plan to invest the money? In other words, when do you need the money you are going to invest to claim tax deductions? If you want the money ASAP? Well, you should be prepared to wait at least five years before getting the money. The safest option, the five-year tax-saving bank fixed deposit, has a lock-in period of five years. ELSS or tax-saving mutual funds have a mandatory lock-in period of three years, but you should invest in them only if you have an investment horizon of at least five to seven years.

Also, you should invest in ELSS mutual funds only if you have a high risk appetite. These mutual fund schemes invest mostly in stocks. Equity or stocks have the potential to offer higher returns over a long period, but they can be extremely risky and volatile in the short term. Also, keep in mind that most of the other popular options such as PPF, NSC, and so on are government-backed. Even five-year tax-saving fixed deposits are mostly safe.

If you are planning to invest in ELSS mutual funds to save taxes this year, here are our recommended schemes: Best ELSS funds to save taxes in 2020

Visit link:
3 easy steps to choose your tax-saving investments this year - Economic Times