Invictus (The Future of Investments)
Traditional investing is handicapped by a number of key issues: high fees, lack of access to high yielding investment opportunities, and illiquidity. Blockchain, the technology underpinning cryptocurrencies, provides solutions to these structural issues that open up investment possibilities to a whole new investor base.
The popularity of cryptocurrencies in the past few years has shown a hunger by individual investors to access unique investment opportunities. The market capitalization of the cryptocurrency market now stands at over $200bn — cryptocurrencies are by their nature an inclusive asset class; allowing investors to participate with extremely low investment minimums, no geographical restrictions on investments and almost instant liquidity through secondary market trading. Cryptocurrencies, however, are extremely volatile and appeal to traders who thrive on market volatility.
Enter Invictus Capital, a company that is evolving the asset management landscape and offers alternative investment products for the modern investor, similar to what Revolut and N26 have done for banking.
If you haven’t heard of Invictus Capital before, you will most certainly have heard of CRYPTO20 (C20), the world’s first tokenized crypto index fund. Invictus Capital, a company comprised of blockchain engineers, data scientists and experienced analysts, is the investment management company behind C20. C20 tracked the indexed value of the top 20 cryptocurrencies by market capitalization, ensuring substantial diversification which mitigates the impact of high volatility. C20 utilizes the FTSE Russell Capping Methodology, which caps the maximum investment into a single asset to 10% of the total fund. These caps are re-balanced on a weekly basis, this time frame was determined to be the most suitable to match the volatility of the market and to mitigate asset churn. C20 launched in 2017 and has processed tens of millions of dollars in redemptions verifiable on the blockchain over hundreds of transactions since then and has around $20m in the fund.
Whilst C20 did extremely well during the bull market, the team worked diligently to pioneer an even better fund that would offer investors a cash hedge protection during times of market downturn — CRYPTO10 Hedged. CRYPTO10 Hedged (C10) is a smart index fund which has been designed to provide investors with exposure to the top 10 crypto-assets by market capitalization, whilst limiting loss of capital through a dynamic cash hedging mechanism. The C10 cash hedge algorithm has been optimized to provide draw-down protection during times of market stress, whilst allowing for efficient allocation into crypto-assets during upward trends.
C10 built upon the best aspects of C20. This new fund is designed to give long-term investors healthy exposure to the top 10 crypto-assets whilst minimizing long-term risk. It is the ideal fund for any investor who wants direct exposure to cryptocurrencies but also wants downside protection in times of market volatility. .
C10 utilizes the same weekly re-balance schedule, and raises the individual asset cap to 15%. Paired with the ability of the fund to trade crypto assets into cash (up to 100% of the fund), downside risk is greatly reduced in times of large market stress. It is worth mentioning that Invictus Capital maintains the lowest annual fees (1.7% for C10) as this management process is entirely automated. These fees are further reduced by Invictus efficiently lending out the cash in the fund.
A key difference between C20 and C10 is the funding method, with C10 being an open-ended fund. Onboarding and redemption is easy — C10 does not require investors to trade on exchanges. Investors can simply purchase tokens directly on the Invictus platform using BTC, ETH, DASH or TUSD. The acceptance of TUSD allows for investors who want to invest using fiat. C10 tokens can also be redeemed for their underlying value in ETH, guaranteed, within one hour 24/7.
In a bid to cater to investors who wanted access to cryptocurrency volatility without ever having any direct exposure, they launched the Invictus Margin Lending (IML) fund. The fund aims to maximize interest income on USD and USD equivalents, with minimal anticipated drawdown risk, by taking dollar-based positions on margin lending platforms. Interest rates are optimized across exchanges and currencies by a combination of efforts from the fund management team and automated technology that is designed to take advantage of periodic spikes in the daily rates to lock in higher rates for higher periods and targets spectacular compounded returns ranging from 10 to 18% p/a after fees. A portion of the fund is maintained in a liquidity pool so that investors are able to withdraw funds at any time.
Investors wanting to enter the fund can do so with TUSD, and are able to exit the fund without any lockups or restrictions, something that cannot be accomplished in traditional funds. Token redemptions are processed every 24 hours in TUSD. Their website details the daily rates achieved, token NAV (Net Asset Value) and assets in the fund at any given time thus allowing for complete transparency. Returns on the IML fund are not correlated to the performance of any major equity indexes such as the S&P500 and is thus an extremely useful tool for any investor looking to diversify their portfolio.
Lending facilities have exploded in the cryptocurrency market in 2019, but based on the rates achieved thus far, the IML fund appears to be the leading interest-bearing fund with net returns of over 11% annualized since inception — beating out competitors like Nexo and Celsius who have managed to return around 8% on stable-coins and USD.
It is clear that Invictus Capital continues to fulfill their vision of making investing convenient, transparent and low-cost. They offer advanced, well-thought of funds that cater to a range of investors wants and needs and I hope to cover these in more detail in upcoming articles. In the meantime, it is worth taking a look at their website and researching their funds. I guarantee you will not be disappointed — they truly personify evolved asset management.
