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The Democratization of Wealth Management: Hedged Mutual Fund Blockchain Protocol.

The Democratization of Wealth Management: Hedged Mutual Fund Blockchain Protocol.

Authors :
Kashyap, Ravi
Source :
Research in International Business & Finance; Aug2024, Vol. 71, pN.PAG-N.PAG, 1p
Publication Year :
2024

Abstract

We develop several innovations to bring the best practices of traditional investment funds to the blockchain landscape. Specifically, we illustrate how: (1) fund prices can be updated regularly like mutual funds; (2) performance fees can be charged like hedge funds; (3) mutually hedged blockchain investment funds can operate with investor protection schemes, such as high water marks; and (4) measures to offset trading related slippage costs when redemptions happen. Using our concepts – and blockchain technology – traditional funds can calculate performance fees in a simplified manner and alleviate several operational issues. Blockchain can solve many problems for traditional finance, while tried and tested wealth management techniques can benefit decentralization, speeding its adoption. We provide detailed steps – including mathematical formulations and instructive pointers – to implement these ideas and discuss how our designs overcome several blockchain bottlenecks, making smart contracts smarter. We provide numerical illustrations of several scenarios related to our mechanisms. • Innovations to bring the best practices of traditional funds to blockchain. • Update fund prices, charge performance fees and incorporate investor protection. • Detailed steps to implement these ideas as blockchain smart contracts. • Highlight main issues with the operation of mutual funds and hedge funds. • Discussion of how blockchain technology can alleviate those concerns. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
02755319
Volume :
71
Database :
Supplemental Index
Journal :
Research in International Business & Finance
Publication Type :
Academic Journal
Accession number :
178943296
Full Text :
https://doi.org/10.1016/j.ribaf.2024.102487