A startup led by former Facebook and Google employees is launching a cryptocurrency index fund.

Backed by AngelList founder Naval Ravikant, Bitwise Asset Management is today coming out of stealth mode to reveal its first product, the Bitwise Hold10 Private Index Fund – a market cap-weighted basket of the top 10 cryptocurrencies by network value. With the launch, investors who participate in the fund will own shares meant to reflect the value of the underlying assets, allowing them to achieve what BitWise argues is a broad exposure to the cryptocurrency market.

The fund's co-founders are Hunter Horsley, a former Facebook and Instagram product manager and Wharton graduate, and Hong Kim, a Google veteran and former Korean military software security expert.

One of the key goals of the fund, Horsley said is to create a way for investors to gain exposure to cryptocurrency with the ease and economy of investing in an S&P 500 index fund.

Horsley told CoinDesk:

Bitwise's basic thesis breaks down rather neatly along those lines – particularly the assessment of the founders that existing investing options now present significant challenges to retail investors.

According to Horsley, prior to March of 2017, investors could gain broad exposure to the cryptocurrency asset class simply by owning bitcoin, which until then represented 85 percent of the total market value.

However, with the rise in the total market capitalization of the various different networks to more than $100 billion, he contends that achieving such exposure now requires more active management and, given the nascent stage of the market, specialized expertise.

But amidst a boom in the number of investment options available, Horsely intends to compete on more than simply market knowledge.

Notably, the fund charges just 2 percent on an annualized basis. Further, it does not charge a fee on profits, making it more reasonably priced than alternatives, he claims.

By comparison, other funds are charging investors a traditional hedge fund-style "two and twenty" fee, which includes a sizable 20 percent fee charged against any profits the fund generates. While the fund requires investors be both accredited and based in the U.S., the minimum investment is a relatively modest $10,000.

Also, in what he argued puts the fund in contrast to a wave of other hedge funds launched over the summer, Horsley said Bitwise will seek a passive investment strategy. While other funds actively trade crypto assets in an attempt to generate a larger return, he said BitWise will simply hold a portfolio of assets that represents the broader market.

Another advantage, Horsley said, is that retail investors won't have to take ownership of any cryptocurrencies themselves, or to devise a strategy to ensure the security of their investments. "We are 100 percent 'cold storage'," he said, in reference to the way the fund stores its assets in a more secure, offline environment.

The only time the assets will come out of cold storage, he added, is when the fund rebalances itself – meaning the times when the fund must buy or sell coins in order to reflect the same relative market capitalizations of the market more broadly.

Horsley explained:

Naval Ravikant image via Consensus