Understand how XP's cryptocurrency investment funds work

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XP Investimentos is part of XP Inc., currently responsible for several brands in the national financial market. This union of brands allows XP a very robust structure and liquidity not only in Brazil, but also in other markets. Here, specifically, we highlight XP's share of the crypto market.

According to XP itself, 2020 has been a year of prosperity for cryptocurrencies. These currencies, as they are not directly linked to a country's economy, end up benefiting and appreciating in times of tension, such as the one we are facing this year.

XP's cryptocurrency fund

In 2020 another great novelty was presented by XP Investimentos. In partnership with Discovery, one of the funds belonging to Hashdex, the company launches an investment fund specializing in cryptocurrencies.

The great difference of this fund in relation to others in the company is that it is much more accessible for beginning investors. With an investment of only five hundred reais, those interested in investing in this fund can now link to XP in the crypto market.

Prior to Discovery's appearance, XP customers could only invest in crypto-specific funds, such as Explorer, when they had assets in excess of 1 million reais (and needed a minimum investment of ten thousand reais).

What the company seeks with this is a kind of popularization of this market. Currently, with a minimum investment of 500 reais, XP is responsible for one of the most accessible funds nationwide.

The fund already approved by CVM also draws attention due to the liquidity of the results presented. The fund, created in 2019, had some declines in 2019. Even so, in the annual average, it reached an increase of over 90%.

In other words, XP Investimentos fund appears as a safer alternative for investors who are not yet completely confident in the cryptocurrency market. As part of the portfolio is invested in fixed income, the investor ends up having greater protection over their assets.

Even though this represents a reduction in yields on the final account, especially for traders who are just starting out in the market, trading with this type of fund tends to be worthwhile.

The brokerage before the fund

Despite all the benefits offered by XP, we must always be aware of our investments, understanding market movements. The fund's launch, not by chance, is a response to the closure of XP's cryptocurrency brokerage.

Less than two years after its opening, Xdex, XP's cryptocurrency brokerage, went out of business. The company posed part of the problem in regulatory issues relating to brokers and banks in Brazil. But it also pointed to a possible flaw in the projection of the crypto market's growth.

According to some clients who had brokerage accounts, one of the big problems with XP's exchange is that the platform prevented investors from transferring their cryptocurrencies to other portfolios. In other words, the entire value traded was kept within the brokerage itself.

Should I invest in funds or brokerages?

What we're trying to show you here is that even a big company like XP can have some problems in the crypto market. For this reason, it is always important, in addition to the company's credibility, to be aware of each segment in which it operates.

In quick searches on the internet, you can see that the company still does not stand out in the cryptocurrency market, especially when we look at the problems of the former brokerage.

When we talk about investing in funds, it seems that so far XP is making coherent and better choices. Therefore, keep in mind that in addition to Hashdex, there are three other companies in the country that have investment funds in cryptocurrencies, all duly authorized by CVM.

Therefore, before making decisions between investing in a brokerage firm or in a fund, first see which investment format suits your strategy.

Information provided by investimentosinfo.com.br