In 2021, the assets that grew the most globally were ESG investing and cryptocurrencies. But in Latin America the wealth management industry approaches the new world of decentralized finance with caution and some mistrust. That is why Daniel Vegue Domínguez, one of the founders of BlockAssetManagement.com and Estating.com, travels through the region explaining the revolution we have underway, as he did during an interview with Funds Society at the Sofitel Hotel in Montevideo.
The first thing is credentials, and both Vegue and the senior staff of Block Asset Management come from the world of finance, with eminent careers in Welath Management, Asset Management or the stock market. They came to the world of cryptocurrencies because they are convinced that, thanks to Blockchain technology, units of value can be expressed differently and in a totally reliable way.
“Soon we will be able to exchange Amazons, Free Markets or Apples because every company or collective will be able to issue their units of value without going through central banks, in a reliable digital system, which will give them independence and totally global investment capacity,” he explains. With cryptocurrencies, or decentralized finance (DEFI), there is a moment when the veil disappears and you start to have a clearer vision of what is happening and how to take advantage of the opportunities.
The first fund dedicated to blockchain and digital assets
Block AM”s first initiative came in 2017, with the creation of the first fund of funds dedicated to Blockchain and Digital Assets. It took them several months to register it in Luxembourg, explains Vegue, because it was a complete novelty.
The strategy belongs to the world of Alternatives and consists of investing in all the companies participating in that investment boom that is exploding on us in 2021, with a return of 300% this year, something that, according to Vegue “is the norm for the stage of maturity in which the selected companies are at.”
Undoubtedly, this ability to find the companies and managers in the sector, understand them and incorporate them, is the most valuable treasure of the fund, which has a low entry fee, as it accepts participants starting at $10,000. The strategy is aimed at sophisticated qualified investors, being an alternative fund.
“Investing in the digital/crypto asset market is a very specialized investment. A new, immature, unregulated in many regions, fast growing and high risk/reward asset class. However, it has evolved at an incredible pace since the emergence of Bitcoin in 2009. The market now consists of thousands of crypto assets and hundreds of digital asset funds. Navigating these selections is extremely challenging. How do investors manage risk? How do you conduct in-depth due diligence? How can you achieve diversification? Can you reduce volatility?” the firm’s website highlights.
At first glance, the offer seems perfect for the new generations, or for those clients who have made their wealth in the technology industry and are looking for a novel offer. But appearances can be deceiving, and investors over 60 are being very receptive to the offer: “They have already lived through a revolution, they know that everything can change, they understand what is happening,” explains Vegue.
Currently, most of the fund’s participants are in Latin America, but there is also a strong presence of British or European expatriates. Registered in one of the most prestigious jurisdictions, Luxembourg, it is an alternative product (AIF), audited and denominated in dollars and euros.
Estating, the first step towards a global real estate market
At the moment, Vegue’s main endeavor is a more recent initiative: Estating, the embryo of a global real estate exchange, fully decentralized. “Financial advisors and their clients are looking for reliable and easy-to-manage real estate products. And they are right, the biggest market in the world (bigger than fixed income and equities) is real estate, but we don’t know it because it is not banked,” explains the financier.
From this premise, the idea of creating a Real Estate Nasdaq was born, an idea that has a key player: Martin Halblaub, creator of the Swiss digital stock exchange (SDX) and one of the founders of Estating.
Estating, firm launched 20 months ago, aims to enable investment in apartments and houses in the luxury segment in various cities around the world. The client buys part or all of the unit, and the company takes care of the securitization, the conditions of the partnership when it is a shared property, the rental arrangements and the distribution of an annual coupon. Blockchain technology guarantees reliability and transparency.
Vegue thinks that the future lies in people being able to “save in a unit of Real Estate value”, worldwide, without obstacles. Currently, the entry is from 50,000 dollars, but Estating intends to democratize and gives an example: the firm recently made the smallest securitization in history, a garage, as a symbol of what starts small and becomes something big.
