History has shown that one of the simplest ways for investors to consistently give their portfolio the best the market has to offer is by investing in the S&P 500 (^GSPC 0.16%). Composed of 500 top U.S. companies, the S&P 500 has returned an average of 10% per year over the long term.
A 10% return on average -- which includes up years and down years -- is nothing to sneeze at, but for a growth investor with a long time horizon (and a greater appetite for risk), there are better opportunities on the market. Oftentimes, this means investing in riskier stocks, including tech companies on the cutting edge of innovation, since they have notable long-term potential. However, there is another asset that is proving itself to be a valuable addition to portfolios: Bitcoin (BTC 0.84%).
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The Bitcoin effect
Over the last five years, Bitcoin is up more than 675%. Zooming out even further, the cryptocurrency is up much more. The reason behind Bitcoin's massive appreciation is nuanced, but what is important to note is that it still holds plenty of potential to keep growing.
While blockchains and cryptocurrencies hold significant potential to transform financial markets, the majority of the crypto asset class is fraught with speculation. For several reasons, Bitcoin is the safest investment one can make when it comes to crypto. The crypto market is worth $2.57 trillion and Bitcoin makes up more than 50% of this value. What this means is that as Bitcoin goes, so does the rest of crypto.
This makes it a great proxy for investors to gain exposure to the burgeoning potential that crypto holds without having to pick and choose individual winners, kind of like investing in the S&P 500.
Now what if investors were able to invest in Bitcoin and the S&P 500 through one convenient exchange-traded fund (ETF)? Enter the Cyber Hornet Bitcoin Strategy ETF (ZZZ 0.43%) from OneFund.
NASDAQ: ZZZ
Key Data Points
What makes this ETF unique
This ETF is one of a kind. It allocates 75% to the S&P 500 and the remaining 25% to Bitcoin futures contracts. Debuting back in December 2023, over the last six months it has returned a generous 20% as Bitcoin and the S&P 500 both sit near all-time highs.
The beauty of the Cyber Hornet ETF is in its simplicity. By adding this ETF to your portfolio, you will gain exposure to the most valuable cryptocurrency on the market and with that, the gains that only Bitcoin is able to provide. In addition, investors put their money to work through the S&P 500 and top companies, including Microsoft, Nvidia, Apple, and many other household names.
The most significant advantage this ETF offers is the mix of old and new. The 75% dedicated to the S&P 500 acts as a buffer to the volatility and significant declines that have historically plagued Bitcoin every four years or so. While a 25% allocation to Bitcoin gives investors the shot at pops of growth.
Consider 2022, for example. During this stretch, Bitcoin and its futures contracts fell more than 65% while the S&P 500 dropped 19%. While the Cyber Hornet ETF wasn't trading at the time, it would have slipped by about 30% given its allocation. Don't get me wrong, a 30% decline isn't ideal, but this example goes to show how investors are protected from the worst of Bitcoin's corrections due to the ETFs unique allocation strategy.
Now, on the contrary, in 2023 the S&P 500 grew by 24%. Again, while not trading, the Cyber Hornet ETF would have displayed its true power by returning a commendable 59%, primarily driven by Bitcoin's resurgence and the rebound of Bitcoin futures contracts which grew by roughly 165%.
This Bitcoin/S&P 500 ETF might be right for you if...
Perhaps you have heard of Bitcoin's ability to increase significantly in a short span of time or you heard about the recent approval of spot Bitcoin ETFs, but are still timid about diving in headfirst. Maybe you are unsure of how to buy Bitcoin on a crypto exchange or how to operate a digital wallet.
If that is the case, but you have done your research and believe in Bitcoin's long-term potential, the Cyber Hornet ETF might be right for you.
Now it should be made abundantly clear that this ETF isn't for an investor nearing retirement, who doesn't have a lot of time to recoup losses. While Bitcoin has proven its ability to generate substantial returns, a by-product of its finite supply and increased adoption, it isn't without its corrections.
For those with some time on their side, the Cyber Hornet ETF offers a balance that few other ETFs can provide -- a mix between the best of crypto and the best the traditional stock market has to offer. Your money could benefit from the long-term trajectory of Bitcoin while being shielded from the heightened volatility that so often comes when investing in cryptocurrencies.
