Los Angeles-based Wave Financial has announced that Fidelity Digital Assets will provide custody for its new Bitcoin Income & Growth Digital Fund.
Wave Partnering With Fidelity
On Sept. 19, Wave Financial announced the launch of the world’s first crypto derivatives-based yield fund with the objective of generating yield by selling call options on bitcoin held under management. At the time of the announcement, Wave predicted a distributed dividend of 1.5% net asset value (NAV) per month, resulting in an 18 percent target annual yield.
Ben Tsai, a managing partner at Wave Financial, said of the fund,
I think what was missing in the crypto market is a lot of very solid traditional types of products, but with crypto assets.
More recently, the financial company has announced a partnership with Fidelity Digital Assets to provide custody for bitcoin held in the fund.
Despite touting an attractive investment return and being open for subscriptions, Wave’s new fund has been slow in attracting investors.
Samuel Lee, financial advisor at Chicago-based SVRN Asset Management, told CoinDesk low engagement with the fund stems from the risk involved,
A lot of income funds with very high yields are often sacrificing price returns. While you are getting hefty premiums, you could be sacrificing all that upside potential.
Wave’s fund will rely upon accurately identifying mispricing in the call options market, which Lee calls tricky. The new fund is betting on less-skilled investors and market inefficiencies to produce substantial returns.
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