The Democratization of Wealth Management: Hedged Mutual Fund Blockchain Protocol

Ravi Kashyap

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.

Date: 2024-03, Revised 2024-07
New Economics Papers: this item is included in nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Research in International Business and Finance, Volume 71, August 2024, 102487

Downloads: (external link)
http://arxiv.org/pdf/2405.02302 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2405.02302

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().