Suman Banerjee, CIO of Hedonova, Discusses the Role of Cryptocurrencies in Alternative Investments

Suman Bannerjee, CIO, Hedonova.

In this exclusive interview, he shares his expert insights on the growing significance of cryptocurrencies and blockchain technology in the alternative investment landscape. As the alternative investment market continues to thrive, Suman sheds light on the potential of cryptocurrencies as an asset class, their advantages, challenges, and how Hedonova manages risk while incorporating them into their investment strategy. For individual investors considering entering the crypto market, he also offers valuable advice and key factors to consider before making investment decisions in this evolving space.

1. As the CIO at Hedonova, how do you see the role of cryptocurrencies and blockchain technology in the alternative investment landscape?

The alternative investment landscape is booming since the last few years and is only projected to thrive more in the next few years. Cryptocurrency and blockchain have come in the limelight for being significant contributors to the alternative investment market. While cryptocurrency is an alternative investment blockchain is the underlying technology that makes the working of cryptocurrencies possible. However, cryptocurrency is a profitable investment option for investors with a serious growth mindset and a sizeable risk appetite. Cryptocurrencies have the potential to offer high returns because they are being utilized by various sectors like healthcare, supply chain operations, finance, education, and others. It transcends any global barriers making cross-border transactions seamless. It also offers a chance for diversifying one's investment portfolio from traditional investment options. Ultimately, the future of cryptocurrency in the alternative investment landscape is a bit uncertain, but highly promising.

2. With your expertise in emerging markets and alternative investments, how do you assess the potential of cryptocurrencies as an asset class? What advantages and challenges do they present compared to traditional investment options?

In the recent years, cryptocurrencies have seen a rising increase in becoming a reputable and trustable asset class. It is an alternative investment and as the name suggests, should be invested in alongside traditional investment options. The goal is to not rely on it as a sole income creation strategy, but to diversify your portfolio to maximize profits and mitigate risk simultaneously. Some of the more obvious advantages of cryptocurrencies include them offering a chance for higher returns than traditional investment options like stocks, bonds, and other securities. However, having a high profit potential means cryptocurrencies are quite volatile and carry a higher level of risk, especially if they are not managed by the right fund management team. Investors have to be vigilant and keep a tab on regulatory changes, the technological risks, and any fraudulent activities throughout, which is not so much the case with traditional investments, as they are regulated by SEBI and are safer than cryptocurrencies.

3. The crypto market is known for its volatility. How do you approach risk management and ensure a balanced portfolio when including cryptocurrencies as part of Hedonova's investment strategy?

Given that investing in cryptocurrencies carry risks and market volatility, we approach risk management in a very thorough way. We've come up with a solution that helps our investors invest in cryptocurrencies and bitcoins minus the downside risk. We rely on structured notes, which means we invest in cryptocurrencies indirectly. We track the performanceof the structured note so our investors can benefit from the rise in currencies and not lose money if the currencies fall. So, the upside is that their money remains secure throughout.We value and imbibe transparency in all our transactions and communications, so our investors are aware about every T&C from the start.

4. Given Hedonova's focus on alternative assets, how do you incorporate cryptocurrencies into your overall investment strategy? Do you view them as a standalone investment or as part of a broader diversification approach?

We don't go overboard with our investments in cryptocurrencies and follow a more balanced and diversified approach. We encourage our investors to diversify their investment portfolio - so we don't always advocate forcryptocurrencies as a standalone investment..At present, we offer investors the opportunity to access 10+ alternative investment asset classes in one fund, of which cryptocurrencies is part of. These alternate asset classes include equipment financing, litigation finance, real estate, startups, music royalties, among others. The idea behind bringing various asset classes under a single fund is to mitigate risk for our investors. In case, one fund underperforms or performs negatively, the others will be there to hedge the risk to their maximum capacity. We incorporate cryptocurrencies only after thorough assessment of risk-return, market and regulatory changes, and the investor's risk appetite, among other due diligence.

5. As a seasoned investment professional, what advice would you give to individual investors who are considering entering the crypto market? What key factors should they consider before making investment decisions in this space?

It can be quite tempting to get on the cryptocurrency bandwagon, however, every first-time investor should always do their due diligence before jumping into any alternative investment. The first step would be to educate yourself on the various types of cryptocurrencies and the risks associated with them. Study the market trends, regulatory developments, technological updates, the performance, the fundamentals, their utility and adoption rate, among other factors. Try to spread your cryptocurrency investments across different sectors like Ethereum, bitcoin, DeFi tokens, or others to hedge risk and increase your chance of profit. Definitely take the help of a certified investment professional or company to get tailored guidance through all steps of the investment journey. Study the credentials of your fund managers to evaluate their level of expertise in the industry. Lastly, start small. Allocate a reasonable amount of money at first before going big. Fortunately, Hedonova lets you invest a minimum value of 5000$ so you can gain steady exposure to the market while keeping your investment minimal.