Skip to content
Crypto Portfolios Crypto Portfolios

Crypto Portfolios

iVaR is the risk measure best suited for this young asset class.

Investors are increasingly interested in digital and crypto assets and are seeking advice for navigating this new space.

As regulations make it easier to navigate for institutions, it appears to be the perfect time to consider adding digital assets portfolios to your offering. Offering access to this asset class intelligently is an opportunity for advisors and wealth managers to attract and retain investors who might otherwise take that part of their portfolio elsewhere.

Our innovative measure of risk, iVaR, and our Portfolio Optimizer enable you to offer crypto portfolios, add crypto assets to your portfolio, or build “satellite” portfolios with nothing but crypto. Optimally. So your business grows.

Portfolio Optimizer is a cloud-based portfolio construction framework that offers iVaR, our 4th generation risk metric. Unlike traditional measures of risk, it doesn't assume a normal distribution of risk and is therefore much better suited to this young asset class.

The traditional Indices and “baskets” are sub-optimal allocation mechanisms as they often don’t screen for quality or liquidity, don’t allow investors to capitalise on up-and-coming narratives, and rebalance too infrequently to avoid catastrophes.

Most portfolios in crypto are built by indexing or building baskets, which isn't ideal.

Indexing and baskets are popular but represent several challenges:

Choosing assets

  • Not everything in the crypto market is in fact crypto: stablecoins and asset-backed tokens are probably not what most investors are looking for. More screening is needed.
  • It’s not all “investment-grade”: because of how market capitalisation is calculated, meme-coins and low-activity forks can have a relatively high market-cap despite the investment rationale being quite weak. More screening is welcome.
  • There is no guarantee of liquidity: going purely by market capitalisation gives you little guarantee that you can sell your position if needed. So a liquidity filter should usually be applied at asset selection.
  • Baskets are always late: you can’t build a basket before a narrative has coalesced. As narratives follow prices it means you can only invest in baskets after much of the initial enthusiasm and price discovery has passed.
  • Market capitalisation is not fully-diluted market capitalisation: while true everywhere, the concentration of holdings is more present in crypto and can pose real risks to investors.
  • It’s hard to know what the next narrative will be: DeFi? Alt L1s? NFTs? Gaming? Metaverse? Layer 2s? Defining a large universe based on quantitative criteria offers a better chance at holding winners than even educated guesses.

Choosing weights

  • It pays to be early, and the Top10 is never early. Even indexing the Top200, it is very hard to capture the growth of up-and-coming assets as the 200th asset will likely be sub-1% of the portfolio.
  • It's a very "top heavy" market, and the top is highly correlated: so going with market capitalisation alone might not offer the diversification you think it does.
  • Brutal downfalls: investing in crypto is more akin to venture-investing than investing in stock-market blue-chips, and there have been several spectacular falls from grace. Rebalancing weekly or quarterly is quite risky for such a young asset class.


Whether because they imply the consideration that the returns are normally distributed, misunderstand the role of diversification in reducing risks, penalise gains as well as losses, fail to consider the entire return distribution, or fail to minimise the time it takes to make up losses, traditional risk measures are ill-suited for this new asset class.

InvestSuite’s Value At Risk offers a better solution which overcomes those shortcomings to build portfolios in line with how humans think of risk.

Recording webinar Beyond Baskets and Indices

Would you like to know what our Portfolio Optimizer can do for you and your customers?

What's everyone reading?

Let's talk

At InvestSuite, we help financial institutions accelerate their digital wealth transformation journey and launch the most engaging investing experiences for their customers.

With our suite of white-label InvestTech solutions, we help our clients extend their product range in an agile, fast and cost-effective way so that they can stay ahead of the curve and thrive in this increasingly digital world.

InvestSuite is a place where bankers, creative designers, imagineers, computer and behavioural scientist work together to create user experiences that open up new markets and drive commercial success for our clients.

We're looking forward to meeting you.