KUALA LUMPUR (May 28): Halogen Capital, the first shariah-compliant, licensed digital fund manager, launched the Halogen Shariah Crypto Titans Fund (HSCTF), an actively managed fund that invests in a basket of large-cap digital assets, according to its official website.

According to the information memorandum of the fund, HSCTF aims to provide long-term capital appreciation by investing substantially in shariah-compliant digital assets traded on digital asset exchanges (DAXs) that licensed by the Securities Commission Malaysia (SC).

It also aims to invest in other trading platforms, as may be approved by the shariah advisory council of the SC, or foreign DAXs approved by the shariah advisor.

The same document also mentions that the fund is only available to sophisticated investors who have extremely high risk tolerance, with a long-term investment horizon.

The minimum initial investment amount is RM10,000, while the minimum additional investment amount is RM1,000.  

The sales charge is up to 3% of the net asset value (NAV) per unit. The fund manager reserves the right to waive or reduce the sales charge at its
absolute discretion.

The management fee is up to 1.5% per annum of the NAV of the fund, while the trustee fee is up to 0.04% per annum, excluding foreign custodian fees and charges. The fund’s trustee is Universal Trustee (Malaysia) Bhd.

There is no redemption fee attached to the fund. However, there is a minimum redemption requirement of 1,000 units. And if a redemption request results in the investor holding less than the applicable minimum holding requirements of the fund, the fund manager has the discretion to repurchase all remaining units held by the investor in the fund, and pay the redemption proceeds to the investor.

On investment policy and strategy, the information memorandum mentions that HSCTF will invest 70% to 100% of its NAV in at least four shariah-compliant digital assets. The balance of the fund, if any, will be invested in Islamic liquid assets, such as sukuk, Islamic money market instruments and/or Islamic deposits for liquidity purposes.

Also, up to 70% of the fund’s holdings in Ethereum (ETH) may be used in Ethereum network validation activities, also known as proof-of-stake staking, to secure the ETH network and receive additional ETH in return as reward.

“All [of] the reward arising from the proof-of-stake staking activity, net of direct and indirect expenses…… shall be returned to the fund.”

Specific risks associated with the investment of the fund include high volatility, and decrease in demand for and usage of shariah compliant digital assets, which will affect their prices.

Other risks, including slashing risk associated with ETH proof-of-stake staking activities, improper transfer risk, loss of private key and hacking, are also laid out in the information memorandum of the fund that is available on Halogen Capital’s official website.