Altan Indices: Presenting the Launch of the Altan Insights 100
The Altan Insights team is excited to announce the launch of the Altan Insights 100, an index tracking the performance of the fractional alternative investment landscape. We’re confident there will be questions on the index, the composition, the methodology, and otherwise, so we’ve attempted to preemptively answer many of those below.
What does the Altan Insights 100 track?
The Altan Insights 100 tracks the performance of the top 100 assets by market cap trading on Otis, Rally, Collectable, and Mythic Markets. We emphasize trading; an asset must have begun trading on the secondary market to be included in the index. Additional marketplaces will have assets tracked and included in the index to the extent that the assets merit inclusion based on size and the marketplace reports secondary market trading data.
How is the index weighted?
The Altan Insights 100 index is a market capitalization weighted index. This means that the largest assets will have the largest influence on performance.
How often is the index reconstituted?
Currently, the index is reconstituted at the end of each month – meaning that assets are re-ranked, and the new top 100 forms the index for the month ahead. We believe that, at present, monthly reconstitution makes the most sense, given the frequency with which new assets are added to trading as the industry continues to grow. In the future, it may make sense to shift to quarterly reconstitution.
When reconstituting the index, are market capitalizations that include retained equity utilized?
In some cases, initial public offering amounts for an asset may be lower than the total market capitalization, the previous owner retains equity in the offering. That retained equity is not available to the public at launch. However, once an asset has begun trading, a retained equity owner is able to trade shares in the asset in the same manner as any other shareholder. Therefore, the most relevant figure for the purpose of our index is the total market capitalization.
Are the first trades of IPOs tracked by the index?
First trades are not tracked by the Altan Insights 100. An asset must have begun trading on secondary markets before the reconstitution date in order to be included. This criteria removes much of the noise and influence resulting from a given marketplace’s choice of offering price for an asset. The practice of not including IPOs directly into an index is commonplace; for instance, a company must have at least 12 months of trading history to be included in the S&P 500. Our requirement, of course, is not so stringent, but immunizes the index from the large initial trading moves of assets in either direction on fractional markets.
What does the current composition of the index look like?
As of the 5/31 reconstitution, the heaviest weighting in the index was to Sports Cards at 40%, followed by Cars at 25%, and Sports Memorabilia at 12%. The composition does shift over time, based on both the performance of assets and the issuance of new, high market capitalization offerings. For example, at inception, Cars, both because many of them were issued years ago and many of them have large market capitalizations, accounted for 47% of the index. However, that allocation has decreased significantly as other high market capitalization offerings have begun trading.
As of 5/31, Rally offerings account for 54% of the index, Collectable offerings account for 31%, Otis offerings account for 13%, and Mythic Markets offerings account for 2%.
How often can I expect to see updates?
Expect to see index updates on a weekly basis, typically before midday Monday, reflecting the prior week’s performance.
What’s the inception date and base value of the Altan Insights 100?
The index was incepted on 12/31/2020, with a base value of 1,000.00.
How has the Altan Insights 100 performed to date?
Inception to date through Friday, June 11th, which is also year-to-date, the index is down 15.5%. The index peaked in early February, largely coinciding with the peak of many assets in the card market. Since, as has been well documented, performance of a vast swath of assets has been challenged in the secondary markets. Notably, the inception date of 12/31/2020 bypasses more favorable performance in the second half of 2020.
What happens if an asset gets bought out? Does the Altan Insights 100 become the Altan Insights 99 until the next reconstitution?
Buyouts are a reality of the fractional market, and some months see more than others. Some months see none. In the event of an accepted buyout offer, the purchased asset will be removed from the index starting the day after the announcement of sale. It will be replaced by the next largest asset of the same asset category on the same platform that was outside of the top 100 as of the last reconstitution date. For example, if a Rally comic is purchased on June 4th, it will be replaced by the next largest Rally comic as of 5/31 that was not included in the top 100. Absent an option from the same category and same platform, the purchased asset will be replaced by the next largest asset of the same asset category, regardless of platform.
Are you considering constructing other indices to track fractional performance?
Yes! We are in the process of developing several other indices to provide fractional investors with a diverse and robust set of tools to evaluate the fractional markets. Such efforts include equal-weighted indices, sector specific indices, sector-capped indices, and small-cap indices, among others. Stay tuned!
Let us know!
Disclaimer: You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk. Past performance is no guarantee of future results.