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Research Analyst

High Stakes Index Funds; less risk, more reward?

High Stakes Index Fund Investing; less risk, more reward?

Investors are currently embracing highly speculative investments. One example of this embrace is the explosion in the market cap of cryptocurrency. Another is the emergence of ‘meme’ stocks.

I am definitely a proponent of dedicating a small portion of an investment portfolio to high-risk, high return vehicles. These investments can serve many functions, including acting as educational experiences and, with some luck, as a genuine source of wealth.

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High-Risk Index funds

On a personal note, I include cryptocurrency and meme stocks in the high-stakes portion of my portfolio. Although, I don’t consider cryptocurrency and meme stocks as long-term investment options. For one, I think most cryptocurrencies will fail to fulfil their proposed use-cases (i.e. Internet Computer and Revain). Blockchain is a little oversold as a solution in my opinion. Similarly, Meme stocks are likely to come to nothing and I consider them just a bit of fun. In saying that, I think there is something to be said about the way retail investors revived and recapitalised GameStop Corp. This is an interesting and potentially serious finance topic. But I will save that for another day.

A long-term high-stakes vehicle I appreciate are index funds based on innovative themes. With these index funds, you get the benefit of potentially high returns with less risk and less constant price checking. Additionally, the index themes are inherently interesting, such as electric vehicles, biotechnology, cleantech, cybersecurity, and space exploration.

Kernel Wealth; making Index funds sexy again

Kernel Wealth is a managed fund provider in Auckland, New Zealand. They are going a long way in bringing managed index funds back into style. This is because some of the funds they offer have a speculative kick to them. This isn’t an advertisement for Kernel Wealth; I just like them. They can be thought of as New Zealand’s equivalent to the US-based ARK funds.

Kernel offers two index funds, of which I am a big fan.

  • S&P Kensho Moonshots Innovation
  • S&P Kensho Electric Vehicle Innovation

Both funds consist of US companies identified as the most innovative early-stage companies within their respective fields. Kernel uses Kensho’s AI platform (A product that sprung from the labs at MIT and Harvard) to find these companies and adjust the fund's holdings periodically.

The Moonshots fund gives you exposure to seventeen futuristic sectors, including 3D printing, Virtual Reality, Genetic Engineering, and Robotics. These are innovative spaces that are just as exciting as cryptocurrency and meme stocks, but with less risk and volatility.

kernel wealth

Electric Vehicles; the sure bet?

In my opinion, the Electric Vehicle fund is perhaps one of the lowest risk high stakes investments around. This opinion is based on two critical facets. The first is the recent developments of governments worldwide bringing forward their respective restrictions on selling new combustion engine vehicles. The second is that legacy car manufacturers have unambiguously noted that they will be shifting a great deal of their resources to produce EVs per the forthcoming restrictions. Importantly, the EV innovation fund includes these legacy manufacturers as they will likely dominate the EV space.

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