2021 - QR1 - Invictus Report
2021 - QR1 - Invictus Report
REPORT
FIRST QUARTER OF 2021
www.invictuscapital.com
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Contents
1. Fund snapshots 04 3.2.3 The long-term crypto (DeFi) investment thesis 19
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01 FUND SNAPSHOTS
PERFORMANCE PERFORMANCE
Since Inception
Fund Inception 1 Month 3 Month 1 Year
Q4 2020 Q1 2021 25/11/2017
31/5/18
Top 20 Equally
41.67% 222.55% 713.61% 40.66%*
IHF Total Supply 122,852,180 119,662,263 119,662,263 Weighted
*Annualized rates
Top 10 of 20 Cryptos
Equally Weighted
Equity
Investments (99.79%)
PERFORMANCE PERFORMANCE
Since Average Cash Since Inception
1 Month 3 Month
1 Month 3 Month 1 Year Inception Position Since 13/08/20
31/03/19 Inception
IBA Fund 25.74% 42.57% 185.46%
C10 12.87% 118.85% 365.53% 451.22% 49.6%
Bitcoin (98.50%)
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PERFORMANCE PERFORMANCE
Since Inception Since Inception
1 Month 3 Month 1 Month 3 Month
31/5/18 31/5/18
IML Fund 1.11% 4.68% 12.5%* IGP Fund -3.08% -10.73% 5.3%
Hurdle Rate 0.5% 1.41% 6.0%* GLD Benchmark -4.98% -11.33% -1.33%
PERFORMANCE
Since Inception
1 Month 3 Month
31/5/18
USD (10.05%)
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02 COMPANY UPDATES
2.1 CEO’s foreword
This year has picked up where 2020 left off, with We are confident that his legacy will live on in the
continued rapid expansion of Invictus Capital as Latin American crypto community.
a company (we’re still hiring!) and a breakneck
crypto rally. Our AUM growth surpassed The highlight of the second quarter’s roadmap
expectations in parallel with a barrage of is a soon-to-be-launched Binance Smart Chain
incredible headlines that continue to demonstrate integration that will allow investors the optional
that the crypto market is on the cusp of breaking use of the low-fee blockchain for investment
into the mainstream. AUM swelled 50% to end onboarding, helping alleviate the greatest concern
at over $100 million, with a peak of $112 million newcomers have — the high costs of interacting
achieved in February. with our platform in a regime of extreme
Ethereum network congestion (the blockchain is
This was driven largely by booming altcoin prices currently a victim of its own success).
and fantastic performance for our index funds
Daniel Schwartzkopff C20 and C10, while IML’s risk-adjusted returns This is still only the beginning; we are all hopeful
CEO, Co-Founder continued to dominate its competitors, that the growth of our team is reflected in
with an APY of 20% achieved over the quarter. continued growth in our reach. It remains our
Our product and tech teams were successful in delivering on the launch of the ICAP mission to provide a truly world-class, holistic
community token, with the first ICAP minted on the 4th of January. The timing was alternative investment experience to all investors,
impeccable, allowing our loyal users and newcomers alike to share and contribute to our whether big or small, over the coming quarters
continued success. The token’s value rocketed from $2.30 at launch to $13 over the course and decades. Please read on to uncover a wealth
of the quarter, and investors who had the confidence to stake their fund tokens at inception of content, including broad crypto and traditional
have been well rewarded for their decision. However, an impressively high proportion of market commentary, company updates (now
ICAP remains unmoved and unsold. This, in my eyes, indicates the growing faith that our with a regular section on ICAP), and concise
community has in us, and we hope to be able to surpass even these high expectations. fund-specific reports where we elaborate on this
quarter’s stellar performance.
The quarter did unfortunately bring tragic news in the passing of Jorge Farias, the CEO of
Cryptobuyer — a Hyperion Fund portfolio company. Our deepest condolences go out to his
family, friends, and colleagues.
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2.2 High level fund performance markets, with the fund losing 9.01% versus the benchmark GLD
ETF’s 10.32% decline. The fund has now outperformed 6.72% over
Our suite of funds has continued to deliver admirable performance the benchmark (representing a 6.93% return over the benchmark on
during the current crypto bull run, with the introduction of ICAP an annual basis).
rewards also providing a significant boost to investor returns (see
discussion of ICAP in Section 2.6, below). The Emerging Markets Solar Fund (EMS) continued on its path
of steady growth and inflows to match, although rand weakness
Our cryptoasset funds, namely Crypto20 (C20), Crypto10 Hedged saw the value of the fund’s solar investments dip in dollar terms.
(C10) and Bitcoin Alpha (IBA) led the charge, with respective The 4.45% return registered is still impressive in its own right, and
appreciation of 221.29%, 118.15%, and 42.57% over the quarter - represents an APY of 19%.
regrettably, the latter’s option strategy struggled to keep up with the
breakneck pace of the relentless Bitcoin rally. Further detail on all the funds can be found in the fund-specific
reports in Section 4.
The Margin Lending Fund (IML) boasted industry-leading
performance of 20% APY this past quarter (with 7-day average APY
peaking at over 50% on February 24). This performance was driven 2.3 Supporting secondary market liquidity for C20 & ICAP
by alternative, market-neutral yield generating strategies continuing
to grow in their share of the asset allocation — with these proprietary Recognizing that trading conditions on secondary markets for ICAP
strategies benefitting significantly from the bullish market mood. and C20 were less than ideal, two measures were implemented
These returns easily outstrip those of our competitors, even before this quarter with the aim of boosting liquidity in these markets.
considering the highly beneficial tax implications of tokenization in On 10 February HitBTC went live with a C20/USDt trading pair, to
some regions. Returns have again spiked in early April to exceed 30% complement the pre-existing C20/ETH and C20/BTC pairs. The USDt
APY at the time of writing. pair has already grown to exceed the ETH pair, with comparable
volumes to the BTC pair.
The Hyperion VC Fund (IHF) delivered a return of 3.92% for the
quarter, with the token NAV appreciating to $0.2477, the portfolio
companies — particularly Syntropy, Quantfury and OVEX — are poised However, the most actively traded C20 market is now the Uniswap
for continued success, and if they manage to live up to their immense C20/ETH pair, after the introduction of a generous liquidity mining
potential, further upside revaluations in the future are almost certain. program, with Invictus Capital contributing $10,000 per month to
each of the C20-ETH and ICAP-ETH Uniswap liquidity pools.
The Gold Plus Fund (IGP) continued to demonstrate its value
proposition over traditional gold exposure despite weakness in gold
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At the start, this represented APYs in excess of 300% for liquidity Whilst these airdrops are likely to be extended beyond the initial
providers. For C20, this program arose as a result of us recognizing 3-month period (with other pairs, such as IHF also under consideration
that the missed opportunity of ICAP earnings was prohibitive of a for receiving rewards), they are unlikely to continue indefinitely.
self-sufficient DEX market for C20 developing organically — with However, it is our hope that fee earnings alone, based on significant
trading volumes (and fee earnings for providing liquidity) low as even trading volumes generated by arbitrage opportunities between prices
moderately sized trades on Uniswap were rendered prohibitively across different currency pairs, will be sufficient to maintain liquidity at
expensive by a combination of slippage and high gas fees. The program high levels after the program’s withdrawal. ICAP liquidity should also
has thus far been a great success, with the size of the liquidity pool naturally improve over time as more supply is created.
skyrocketing over 3,800% to $800,000 at the time of writing, whilst still
offering attractive APYs of around 20% at present. Coinciding with this For a step-by-step guide on how to add liquidity to these Uniswap
has been a dramatic pickup in trading volumes, with the Uniswap fees trading pools, please consult the program’s original Medium
alone now offering around 7% APYs (on top of the additional 15% that announcement.
the liquidity program airdrops currently represent).
*Open-ended funds exclude Hyperion and C20. These 2 Funds differ in that no new tokens
can be created, and thus have less room for sustained growth.
Since IHF contributes fees to buy-and-burns a full quarter in arrears (versus a month in arrears
for the other funds) this pie chart reflects 4th quarter IHF fees and December, January, and
February fees for the other funds.
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Speculative demand should also find support from the strong uptrend
for fund AUM, with a declining share of IHF fee revenue’s dominance
going forward seeming likely. This obviously bodes well for the
value that will be committed to buy-and-burns in the future and,
furthermore, would lead to added diversification benefits for the ICAP
revenue stream.
Invictus Capital AUM growth
Finally, with average AUM over March breaching the $100 million
mark, the proportion of fee revenue allocated to ICAP buy-and-burns
is set to increase in April to 10.5%. This should further support prices.
The next stretch goal is being set at $500 million AUM.
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03 GLOBAL MARKET COMMENTARY Global Market Moves
Green (a reading above 50) signifies expansion over that period, with red (a reading below 50)
indicating a slowdown. The shade of each colour signifies the pace of the expansion/slowdown.
Source: Bloomberg
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Confirmed vaccine procurement Adding to hopes for a continued strong rebound — but also to
200 inflationary risks — are the massive spending plans passed over
the quarter by the US government. Biden’s stimulus package is
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truly remarkable in its size, and justifies the sentiment-boosting
160 effect it’s having on markets. The chart above reflects spending
already planned and authorized, and does not include Biden’s most
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recent proposal for a $2.25 trillion infrastructure plan, with another
120 mystery family-focused plan also on the cards. These are hoped to
100 be funded partially from increased corporate taxes, which may be a
healthy means of limiting the inflationary pressure, but are relatively
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unpopular, even amongst many Democrats.
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25
20
on the assumption that aggregate levels of economic activity return
to normal relatively quickly. Even if there are permanent changes
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to spending patterns, as long as consumers (particularly in the US)
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unleash the massive levels of savings that they have accumulated
5 over the last year, it is likely that elevated pressure will be placed
0 on prices of certain goods and services — even if the nature of the
pressure is novel and more difficult to measure accurately.
US
UK
Japan
Germany
Canada
Italy
Spain
Australia
France
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Money Printing example, with their aging population coupled with extreme monetary
stimulus still not yet manifesting in much-wanted inflation. The
opposite relationship seems to hold, with a tight positive correlation
between the growth rate of the labour force and wages — potentially
explained by greater levels of automation. The fact is that current
levels of inflation are a relatively recent phenomenon associated with
the population explosion that began in the 1900s and helped lead to
the downfall of hard monetary systems.
High savings rates signal the potential for powerful spending forces to be unleashed, driving
a rebound in velocity of money while the Fed is drowning markets in liquidity — probably a
good thing for the pace of recovery, but clearly a worry for those betting on inflation remaining
relatively contained, and central banks remaining accommodative over the medium term.
Source: Board of Governors of the Federal Reserve System
Equities
Source: TradingView
• All bond markets suffered in unison over the first quarter, despite
entering with very different trajectories as growing inflation
•
expectations supported expectations for earlier-than-expected
•
interest rate hikes (interest rates are inversely proportional to
•
bond prices).
• IML’s performance continues to dominate bond exposure.
Foreign exchange
Source: TradingView
• Massive rotation catalysed by November’s vaccine news still
underway, with energy companies and banks key beneficiaries.
• Resource and finance-heavy European equity indices the
standout performer, benefitting from reflation trades and steeper
yield curves.
• Tech sector under pressure from rising yields and rotation out of
pandemic hedges.
Source: TradingView
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• Dollar’s decline has taken a break as safe-haven demand surges 3.2 Cryptoasset market commentary
with rising bond yields, with the euro under notable pressure on
the back of a disappointing vaccine rollout. 3.2.1 Introduction
• Other currencies were fairly flat relative to the dollar, as markets
struggle to digest the macroeconomic implications of a The crypto market accelerated into 2021, closing positive for a
constantly-evolving pandemic situation. fourth consecutive quarter as the market capitalization surpassed
$1 trillion on January 7 and eclipsed $2 trillion just 3 months later.
Commodities The narratives driving the world’s fastest-growing asset class have
evolved at an equal pace, with higher prices and new applications
attracting an influx of both retail and institutional market participants.
Source: CryptoQuant
TradFi money managers bring not only a wealth of capital but also Source: Bloomberg Finance L.P., J.P. Morgan
experience. Their strategies of dip-buying and systematic profit-taking,
which have proven immensely profitable over decades in the equities
markets, are applicable to this higher volatility environment. However,
as Bitcoin continues to mature as a financial asset, the broader range 3.2.3 The long-term crypto (DeFi) investment thesis
of risk appetites and growing array of derivatives markets are likely to
continue to reduce long-term volatility, while lessening the likelihood of To take a step back during this bull run to revisit some of the
80% pullbacks seen in the past. principles behind the crypto investment thesis seems a logical
exercise, providing an opportunity to gauge the strength of crypto’s
There is a strong notion that we are currently witnessing a supercycle.
tailwinds — and more specifically the DeFi industry that has so
While we appreciate the irony in “this time it’s different,” this bull
market has shown an appetite for continuation beyond any prudent recently erupted into the crypto mainstream.
predictions. Crypto markets have thus far bounced back from market Over the past 20 years, digitization has proven a pivotal force,
meltdowns that were both internally-induced (the 2013 Mt. Gox hack, revolutionizing social interaction through the now omnipresent
layer of the internet and now finding a second wind as digital
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forces revolutionize financial assets, a sector which before crypto regulations, controls, and compliance in the 90s. Big tech began to
was largely resilient to change. Decentralization, not in terms of compete, offering the dynamic environment that had been lost. A
blockchain technology, but on a macro societal level, how people similar shift is currently happening, this time from big tech towards
socialize and work, was accelerated by COVID. In our collective crypto, as corporate giants lose their ability to keep up with the pace
isolation we relied heavily on decentralized social interactions, moved of crypto, which is taking over as the innovative frontier. As it stands,
much of our economic activity online, and it follows that a financial opening a bank account typically takes 30 to 40 clicks and anywhere
layer native to the internet is a natural progression. from a week to 2 months to open, with clients often treated as guilty
until they prove otherwise. In contrast, permissionless networks allow
The level of trust in centralized institutions, especially financial ones, for a wallet to be set up in seconds.
continues to fall. The financial crisis in the late 2000s was a catalyst,
and those levels of trust are unlikely to be recovered. More recently, TradFi’s encumbrance of bureaucracy and entrenched power
the GameStop short squeeze caused by the WallStreetBets subreddit structures leaves it poorly suited to move at the disruptive speed of
showed the collective power of retail traders, although through innovation online. Their failure to grasp the disintermediating power
the efforts to undermine their collective success they ultimately of the internet has already cost market share in other sectors. Some
learned the invisible rules of the TradFi system. Although indirectly, exceptions exist, of course, but the disruptive outcome is more likely
crypto was arguably one of the winners out of this movement, as it as the speed of change and innovation accelerates.
caused many participants to question the unfairness of the playing
field, leading them to consider the transparent, immutable, and Lastly, to revisit a trend which we covered in last year’s Q2 report, the
permissionless cryptoverse as an improvement on legacy systems. wealth transfer into the hands of younger generations who are far
Despite its controversial role, Robinhood saw a 460% increase in more likely to invest in crypto is arguably the knockout factor which
crypto traders in the first quarter. would suggest that crypto’s recent rise is just the first two of many
trillions. New asset classes are an incredibly unique opportunity
This erosion of trust is not only external. Insiders are well aware and an exciting place to be. Crypto is a platform that represents an
of the shortcomings and recognize how ripe their own industry opportunity for normal people to find wealth, to reach their financial
is for disruption, now investing their money in their decentralized goals despite their starting point, the 21st century’s very own wild
competitors. TradFi’s view of crypto has undergone substantial west.
change in the past year. Although the lack of engagement and
understanding persists, it seems unlikely that these highly
3.2.4 Bitcoin devours gold
sophisticated investors resist adding crypto and its growing
As far as use-cases for financial assets are concerned, being the
derivatives offerings to their portfolios.
store of value is alpha. As gold has proven, the value that accrues
to a store-of-value asset can extend far beyond its immediate value
Investment banking was once the major destination for top
in use. Any outcome where Bitcoin does not become the dominant
graduates, with little competition. But this began to change as
store of value is a compromise of its full potential. Bitcoin has long
the entrepreneurial, innovative spirit of the 80s was thwarted by 20
been described as digital gold, and we previously noted significant It’s worth noting that being a store of value comes at a cost. Because
correlations between the two, as Bitcoin price action often mirrored that robustness, certainty, and absolute security are cherished principles,
of gold, especially around key inflation events. this slows down the community’s willingness to innovate to suit new
use cases, as the risks of compromising its integrity or exposing
However, more recently, the performance gap between the two has itself to new attack vectors outweigh potential gains. However, this is
widened as Bitcoin has more and more begun to resemble a risk asset positive for the ecosystem overall as it allows for the value accrual to
that thrives under inflationary, high-growth conditions. The digitization of trickle down to other cryptoassets.
money continues to be embraced and supports a preference for Bitcoin
over gold, whose ETF holdings flipped to net outflows in late 2020, It has been eight years since the first Bitcoin ETF was proposed by
signalling falling demand for exposure. In contrast, institutional demand the Winklevoss Bitcoin Trust, with efforts by a number of sponsors
for crypto exposure has risen over 6 times since October 2020, with both like Bitwise and VanEck so far unable to convince the SEC. However,
technical and fundamental indicators suggesting that this trend is still in the grounds on which the regulators dismissed them have improved
its infancy. significantly. Whereas Bitcoin price discovery was once dominated
by BitMEX, an unregulated derivatives exchange, significant regulated
Cumulative flows in all Bitcoins funds and Gold ETF holdings
markets across the world now contribute to a less manipulatable
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All Bitcoin Funds Gold ETFs (RHS)
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market. The demand for Bitcoin as an inflation hedge and the growing
10 consensus around its legitimacy are pointing towards a long-awaited
9 90 approval for VanEck’s Bitcoin ETF under the SEC’s more crypto-positive
8 Gary Gensler, with deadlines queued up ahead of the final deadline
7 70
in November. This would be yet another massive step forward,
$ Billions
$ Billions
6
broadening traditional access to the first-born crypto.
5 50
3 30
Looking forward, the highly anticipated Coinbase public listing may
2 prove to be the dawn of a new era. Historically, massive public
1 10 offerings have ushered in new paradigms that have reshaped
0 industries for years to come. What Microsoft did for software in 1986,
-1 -10
what Facebook did for social media in 2012, and what Uber did to
Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21
mobile on demand, are perhaps useful hints for what we are currently
Source: Bloomberg Finance L.P., J.P. Morgan
witnessing with Coinbase.
Bitcoin reached 10% of gold’s market cap in December and has since
set its near-term sights on silver. At the $74,950 price level, Bitcoin’s
value overtakes all of the world’s silver, assuming its current market
capitalization of $1.4 trillion.
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Fund Reports
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VENTURE CAPITAL
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4.1.1 Venture commentary the first quarter of 2021, spanning a total of 239 deals. This boom in
funding coincides with the bullish sentiment seen across the board
Over the past year we have witnessed a resounding change in for digital assets from late 2020 to present. The last surge in VC
momentum within the cryptoasset space. The elevated interest funding rounds for the sector came in 2018, towards the tail end of
amongst large global institutional investors has no doubt breathed the last bull cycle. It is important to note that VC funding is not related
fresh air into the sails of the blockchain industry. Throughout the to the flurry of capital raised through the ICO mechanism throughout
quarter, it has been interesting to witness the direct correlation 2017/18, but instead venture capital firms taking an equity stake in
between the bitcoin price and startup activity within the sector. startups.
Although the Hyperion fund is currently fully invested, the team
at Invictus Capital have seen a notable uptick this year in funding If we compare the above graph which illustrates the VC deal count
applications from blockchain startups around the world. It is as and value within the global blockchain sector to that of a log-scale
though the multi-year crypto winter has ended with spring fever Bitcoin price graph below, we can see that a clear correlation
amongst developers and entrepreneurs alike. The strength of these emerges. Price action is fueling interest amongst both entrepreneurs
startups and the talent that is being attracted bodes well for the and VC firms, and therefore acting as a leading indicator for industry
longevity of the industry, as heightened interest garners prospects for growth. This is quite the contrary in traditional market sectors, where
breakthrough technologies within the space. For the venture capital price is often a lagging indicator for growth. It is interesting to note
industry, this relationship between price and startup activity is an that the first quarter of 2021 had more dollar funding than the whole
interesting one to explore. of 2020 combined. This solidifies the notion that price action has a
remarkable influence over the interest amongst VC firms.
Blockchain venture capital deals
4 400 Bitcoin log-scale price graph
3.5 350
$59 605
3 300
$34 000
2.5 250
Deal Value ($B)
$22 000
2 200
Deal Count
$14 000
1.5 150
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 $2 500
2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021
$1 700
$700
Source: Pitchbook $460
$300
Pitchbook data shows that blockchain and cryptocurrency startups 2015 2016 2017 2018 2019 2020 2021
$200
Source: a16z
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Where US banks are betting on fintech competitor, they seem to be embracing the technology as a means
US bank-backed deals to Fintech startups by category, 2010- 2020
to enhance their own service offerings. As the age old adage goes, “If
Capital Markets 93 you can’t beat em, join em.”
Wealth & Asset Management 46
SMB 37
Data & Analytics 18 a level of confidence to many of those sitting on the sidelines. The
Banking 13 more of these cycles we go through, the stronger and more inclusive
Insurance 11
the industry seems to become, until such a point where digital assets
Infrastructure 10
Other 21 and blockchain technology are a part of our everyday lives, whether
we know it or not.
Source: CBINSIGHTS
Source: HitBTC Since inception, the Hyperion fund has made a total of eleven
investments, of which six have been tokenized investments, and five
Since the launch of the InvictusCapital.com Token (ICAP) rewards equity positions. Of the six token investments, only Lightstreams
programme, it has been astounding to see the amount of IHF still remains on the Hyperion balance sheet. The success rate of the
tokens that the Invictus community has staked. Currently ~60% of equity positions has been far higher however, with 3 appreciating
all IHF tokens (71 million) have been locked up for periods of up to
significantly in value, one currently held at cost, and one having been
one year. This allows investors to earn an additional yield on their
impaired. To put this into contrast, generally speaking venture capital
Hyperion investment over the longer term. Venture capital should
be considered a long term investment by traditional standards, is an extremely risky form of investment with up to 80% of startups
generating value from its portfolio companies as their visions come failing, 10% roughly breaking even, and 10% making significant gains
to fruition over the years. It is therefore advised that token holders for the funds. As it stands, 60% of the equity positions taken by the
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Hyperion fund have returned multiples of their original investment. restructure accordingly. Currently there is no end date planned for the
This is a stellar hit rate by any VC standards and we look forward to Hyperion fund and Invictus Capital will seek to make reinvestments
what the future holds for the Hyperion portfolio. into new cutting edge startups as liquidity events allow. As the fund
grows in assets under management, so too will the buy-and-burn
distributions for its token holders, as 50% of all realized gains over
$30m will be allocated towards buying back tokens from secondary
markets where it trades under the token NAV.
Performance
Source: Failory
It is important to remember that Invictus Capital has a fiduciary IHF Total Supply* 122,852,180 119,662,263 119,662,263 -2.6%
responsibility to ensure that we do not make hasty valuation IHF/USD $0.077 $0.238 $0.248 223.8%
decisions for the sake of simply increasing the Net Asset Value
of the fund. It is important for the integrity of the fund to maintain
international standards of fair value of startups. The team at Invictus
Capital are heavily invested in the fund, meaning that we have
skin in the game, and back our investments for superior long term
Equity
performance. We do, however, need to maintain a consistent stance, Investments (99.79%)
while following industry best practices and maintain standards at the Liquidity Pool (0.02%)
highest level when deciding whether to revalue a company, and until Listed Tokens (0.2%)
4.1.3 Outlook
If the first quarter of 2021 is anything to go by, the blockchain
industry is set for a wild ride throughout the rest of the year and Quantfury, Hyperion’s largest investment to date, continues to grow
beyond. Coinbase, the U.S based digital asset exchange is set to in strides. The trading app has been experiencing constant growth
conduct its IPO and subsequent listing on the Nasdaq on 14 April. in its trade volumes, reaching over $40 billion for the quarter and
This will be the first crypto company to list via an IPO and will set crossing the 25,000 active users mark. This amounts to a 48%
precedent for the rest of the digital asset market. We have seen increase relative to Q4 2020, and an astonishing 184% since Q1
venture capital funding rounds in the first quarter alone exceed 2020. The team at Quantfury added liquidity via the decentralized
those made over the whole of 2020. The amount of capital flowing exchange, Uniswap, during the quarter for their QTF token. The QTF
into the sector is astounding and bodes well for the longevity of the token provides its holders with a share in the spread revenues of the
blockchain industry. With larger institutions starting to take note and trading app on a monthly basis. All trades conducted on the app are
get involved within the space, this starts to create a positive feedback publicly verifiable via the blockchain, utilizing the IPFS file system.
loop amongst those sitting on the sidelines waiting to participate. The team have subsequently lifted the liquidity from Uniswap as they
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have hinted towards a major exchange listing in Q2. This will be a Operators strategy. Roman Pacewicz is a senior executive with broad
monumental achievement for the team and will no doubt garner a knowledge and experience across the industry. He was formerly the
fresh wave of users to their revolutionary trading app. To see further Chief Product Officer at AT&T, where he was responsible for AT&T’s
details on the QTF token, visit the Quantfury website, or consult their business product portfolios. Together with the well accomplished
telegram group. team at Syntropy, these industry heavyweights look set to launch the
Syntropy stack into the mainstream over the coming months.
The business is doing exceptionally well and they have recently
acquired a broker-dealer licensed entity in the Bahamas, which
undoubtedly will pave the way for further product and market
expansion. The team is constantly pushing updates and
improvements to the app, available on both iOS and Android. To It was with great sadness this past quarter that we learned of the
experience straightforward, zero-fee trading, visit your relevant app passing of Jorge Farias, Cryptobuyer CEO, founder, and a titan
store and download the Quantfury app for easy access to global of the industry in Latin America. Over the last few years, Jorge
markets. wholeheartedly pursued his mission of driving crypto adoption in
developing markets through Cryptobuyer. It has been an absolute
pleasure working with Jorge on this journey, being able to play a part
in driving forward his vision for the region via investments from the
Syntropy has achieved several major milestones in recent weeks. Hyperion Fund. Jorge was an amazing man, passionate and dedicated
The project launched self-service for its tech stack (making it easier to his work and family. Our deepest condolences go out to Jorge’s
to drive mass adoption) and executed the Genesis Node Event for its family and colleagues, who have been left with a gaping hole in their
global internet intelligence layer (which uses NOIA tokens to optimize lives following his untimely passing. We hope his legacy will continue
web traffic, cutting latency by up to 80%). With several weeks to live on and that his immense impact on the region’s industry will
remaining in its #60DaysofGrowth initiative, Syntropy is on the verge continue to be celebrated.
of achieving more than a dozen additional milestones, including the
launch of a VPN product capable of bringing millions of users onto its Jorge had worked tirelessly on the much anticipated launch of his fully
network. fiat integrated crypto exchange. The team at Cryptobuyer have been
awarded the only cryptocurrency exchange license within the Latin
A number of high level executives have joined the Syntropy board American region to date, a true testament to their local presence and
recently to help scale their business towards large scale enterprise trustworthiness within the region’s blockchain and financial industry.
adoption. Shawn Hakl is a well-established figure with deep The exchange is domiciled in Panama with the aim to serve the
experience in the technology and telecom industries that are central broader Latin American region — an area that has shown immense
to Syntropy’s business goals. He currently serves as a partner at interest in the burgeoning crypto asset class. The remaining founders
Microsoft, overseeing the development of Microsoft’s Azure for of Cryptobuyer are committed to uphold the legacy of Jorge and bring
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his already successful business to full fruition. More details will be
provided as we learn of the continuity plans provided by the team.
The primary business of OVEX is to offer a high-volume, high- Even though NFTs promise many new possibilities, there are
liquidity over-the-counter trading venue that provides high net technological gaps limiting this market that the team believe
worth individuals and institutional investors a secure, private, Lightstreams is in a perfect position to capitalise on. The main issue
and personalized trading service. Additionally, the platform offers is that NFT owners don’t have absolute possession and control of the
execution, fast settlement, and insured custody to its clients. underlying asset they are supposed to own. In an NFT transaction,
the new owner only purchases a fingerprint reference to the asset.
In an interview with The Block in March, OVEX expressed interest The real asset can be copied multiple times and the NFT owner has
in conducting an exclusive funding round with a strategic investor. no authority over access control and therefore has no avenue to
Alameda Research, owner of FTX Exchange, has taken up an equity monetise their asset, such as being able to rent or lease it to others.
stake in the firm and will be assisting with further expansion across
the jurisdictions. The new Lightstreams wallet will provide the technology layer to offer
DeFi application developers and marketplaces with new functionality
not currently possible, such as empowering NFT owners to monetise
the assets they own.
33
4.2.1 C20 in review While the crypto sector’s rise was spear-headed by Bitcoin and
Ethereum which saw significant markups, the fund’s growth came
C20 Fund Top 20 (equally weighted) from a broad base and led to significant outperformance: 118%
Annualized returns (since inception) 37.86% 40.66%
over Bitcoin and 60% over Ethereum. Binance Coin (up 709% for Q1)
was the top performer, benefiting from a dual value proposition as
Standard deviation: 0.94 0.94
the largest exchange’s token and as the Ether to Binance’s Smart
Sharpe ratio: 0.82 0.83
Chain, whose low fee offering attracted massive retail adoption
Max drawdown: 93.23% 89.19%
amid Ethereum’s gas fee woes. Capital flows within crypto tend to
Fund launch date: 25 November 2017
be cyclical, with changing narratives driving price appreciation for
Management fees: 0.5% p.a.
themes including layer 1’s, large caps, DeFi, exchange tokens, and
Investment currencies: BTC, ETH, USDT, TUSD
even Dogecoin, which belongs in its own category. Throughout these
cycles, the fund’s dynamic rebalancing strategy acts as a profit-taking
Crypto20 went parabolic over the past 3 months, capturing a 221% mechanism which de-risks inflated constituents on a weekly basis
gain. After opening the year at $1.03, C20 closed at a value of while also gaining exposure to new entrants which tend to present
$3.30 per token. This bull run saw a rapid recovery of C20’s post- great buying opportunities.
2017 drawdown, rewarding the fund’s long-term investors for their
conviction. The fund continues to prove the value of the index C20 individual asset performance
investing methodology. On top of the remarkable capital appreciation,
the scaling of the futures strategy earned an additional $275,143 in
the second quarter.
Crypto20 performance
% Value Increase
Equally Weighted
34
Since inception, C20’s standard deviation has been on par with the exchanges often exceeds $10,000 in a day, with significant volumes
benchmark (0.94) with the fund’s Sharpe ratio marginally lower (0.82 on Uniswap driving fee revenue and further incentivizing liquidity
vs. the benchmark’s 0.83). Over the past quarter, C20 outperformed providers. The increased availability of C20 promotes a more efficient
more than half of its constituents, including both Bitcoin and secondary market for investors looking for exposure to the altcoin
Ethereum. For the increasing number of investors looking to adopt market’s trajectory, as opposed to a stand-alone asset.
crypto exposure into their portfolio, C20 provides a dynamic approach
The high volatility of the bull market saw large movements in
with brilliant upside. The maturation of the asset class has mitigated
rankings and the replacement of eight assets, details of which can
much of the extreme downside risk previously associated with crypto
be found in the annexure. The amounts per asset and equivalent US
investing, as institutions and their investors realize that crypto is
dollar value at the end of the quarter can be seen in the following
here to stay. Participating in this entirely new asset class is a unique
table on the next page.
opportunity, although the pace makes individual asset selection
extremely difficult, with the well-known wisdom of passive fund
outperformance again proving true.
36
CRYPTO INDEX
37
4.3.1 C10 in review Crypto10 Hedged Performance
Equally Weighted
Crypto10 Hedged continued to deliver on its objective to deliver As the current bull market continues to run, a growing number of
capital growth with reduced volatility, gaining 119% over the quarter. investors are looking to manage their risk, redistributing value from
Having opened at $2.53, the token value closed at an impressive their favorite crypto or perhaps another fund to C10. This is owing to
$5.55. Just two years after its inception, the token value has grown the fund’s unique ability to cash-hedge and secure returns once the
455% which together with strong inflows has contributed towards a bullish momentum fades. Not only does the fund remain the most
net asset value of $10.7 million. The fund lost some ground on the popular among new investors, but over the past quarter the inflows
benchmark, which notably does not consist of any cash-mechanism often exceeded those of IML, which received the largest inflows prior
and therefore takes on significantly more risk exposure. to the bull market.
C10’s standard deviation (0.57 vs. 0.86 for the benchmark) and
Sharpe ratio (1.87 vs 1.57) are both favorable, exemplifying the
4.3.2 Portfolio movements
uniquely asymmetric risk-return profile which characterizes the fund.
This type of profile remains elusive within the cryptoasset ecosystem, The fourth quarter saw the inclusion of Uniswap (UNI) in place of
where massive upside potential abounds but remains tainted by Bitcoin SV (BCHSV). Uniswap is the leading decentralized exchange
drawdown risk. on Ethereum, pioneering automated market making which has largely
been copied or forked by other DEXs. This provides C10 exposure
to the burgeoning DeFi ecosystem. Alongside Binance Coin (BNB),
which was discussed in the C20 section, Cardano (ADA) was another
standout performer. Despite a controversial narrative and criticism
of Cardano’s lack of real-world applications, ADA saw phenomenal
38
growth, ending the quarter as the fund’s fourth largest asset. DOT 5( 2) 42,636 1,341,295 12.60%
Although C10’s diversified nature regulates returns relative to any
single asset, the fund did outperform five of the twelve assets which UNI 6( 15) 24,025 293,808 2.76%
were held by the fund, including Bitcoin. LTC 7( 3) 3,086 480,099 4.51%
39
CRYPTOCURRENCY
40
4.4.1 IBA in review indicators in the market, the team made the decision to buy back
the short calls, releasing the fund from the 30% cap, and therefore
IBA Fund BTC Benchmark allowing the fund to partake in further upside. A number of put
Annualized returns (since inception) 424.6% 1250.4%
options were sold in conjunction to help recover some of the
underperformance relative to Bitcoin. This active decision was made
Standard deviation: 0.61 0.74
with a bullish outlook, taking into account fundamental data, as well
Sharpe ratio: 3.02 3.92
as sentimental factors driving the market. The market subsequently
Max drawdown: 38.9% 25.3%
corrected from the $40,000 region, to $30,000. This resulted in further
Fund launch date: 13 August 2020
losses and underperformance relative to bitcoin for the IBA Fund.
Management fees: 0%, performance fee only
This unfortunate turn of events meant that the IBA fund came off
Investment currencies: BTC, ETH, TUSD, USDT
a lower base for the following rallies that occurred in February and
March.
The IBA Fund saw decent returns over the first quarter, posting a
42.6% return to see the period through. Total returns since inception Moving forward we are confident that these events will be mitigated
equate to 185.5%, buoyed by the strong performance of Bitcoin. to the best of our ability, and will aim to conservatively adjust options
Overall fund returns for Q1 lagged behind the Bitcoin benchmark weightings in the event of sharp market movements. The conviction
however, and saw an unfortunate drawdown event occur in January. we have in the fund strategy remains strong and we believe that a
The fund saw marginal outperformance against Bitcoin in February product such as IBA should give investors peace of mind that over
and marginal underperformance in March due to the higher price of any calendar month their investment will not post losses more than
put options. 10% in the event of a market correction. The fund incurs zero ongoing
management fees and only charges a performance fee when the
In accordance with the fund strategy, put options are purchased fund outperforms its Bitcoin benchmark — measured from fund
on a monthly basis to create a ~10% drawdown limit on the fund inception. This aligns investor interests with those of Invictus Capital
and call options are sold at 30% above the opening spot price to and reflects the confidence we have that the fund will grow your
assist in subsidizing the cost of this floor. This is known as a collar Bitcoin over the longer term.
in options terminology. On 25 December, the collar was put in place
at an opening Bitcoin price of roughly $24,000. Bitcoin soon rallied 4.4.2 IBA outlook
to $40,000 by the 7th of January, registering a staggering return of
over 60% in two weeks. Because the upside was capped at 30%, in The bullish sentiment surrounding Bitcoin and the digital asset mar-
this case around $30,000, this caused significant underperformance ket as a whole continues to grow in strides as the reasons for de-
relative to the bitcoin benchmark. With nearly three weeks to go mand continue to compound. The Coinbase IPO listing on 14 April
until the 29 January options expiry, and the vast amount of bullish marks an inflection point in the history of the crypto markets and has
41
truly shone the international light on this nascent market. We have
seen a flurry amongst institutional asset managers launching digi-
tal asset funds, especially now since they have the required service
providers such as custodians and administrators facilitating their
entry. Something that has not been a feasible option until recently. We
foresee that this momentum will continue in a far more sustainable
manner than rallies of the past given the immense amount of par-
ticipation and deepening liquidity. This bodes well for the long term
prospects of a fund like IBA to provide a safer and smoother ride up.
Bitcoin (98.50%)
42
USD LENDING
43
4.5.1 IML in review
IML Fund
Management fees: 2%
Due to the new strategy, the daily returns are more volatile, however
The Margin Lending Fund (IML) boasted industry-leading performance they are considerably higher on average. Because of this, the daily
of 20% APY this past quarter (with 7-day average APY peaking at rates graph was adapted to show the 7-day average return. This
over 50% on February 24). January’s returns set a new monthly APY smooths the return profile into a format which is better suited to
record of 23.6%. This performance was driven by alternative, market- understanding the current state of the rates being earned by the IML
neutral yield generating strategies continuing to grow in their share fund. Returns have again spiked in early April to exceed 30% APY at
of the asset allocation — with these proprietary strategies benefitting the time of writing.
significantly from the bullish market mood, as is evident in the
steepening gradient of the IML NAV. These returns easily outstrip
those of our competitors, even before considering the highly beneficial 4.5.2 Operational update: redemptions now
tax implications of tokenization in some regions. processed in USDT
At the end of the quarter, the IML smart contract was updated to
redeem in USD Tether (USDT) instead of TrueUSD (TUSD). This
decision was backed by investor demand, a favorable settlement
from the New York Attorney General’s probe of Bitfinex, and the
greater availability of USDT on crypto exchanges used by our
investors in comparison to TUSD. The fund still accepts both TUSD
and USDt for investments, as well as fiat payments through Moonpay.
44
IML loan statistics
Q4 saw a slight decline in the number of loans provided and offered
compared to the previous quarter. The average loan duration was 49%
higher at 14 days. The total loan volume was $35.8 million, meaning
that each of the fund’s dollars was lent out an average of 6 times over
the course of the quarter.
% Change versus
Asset Q3 2020 Q4 2020 Q1 2021
previous quarter
Number of Loans
20,855 20,557 19,626 -4.53%
Provided
Total Number of
109,596 147,978 145,866 -1.43%
Funding Offers
Percentage of Offers
19.02% 13.89% 13.45% -0.44%
Accepted
Average Loan
12.17 days 9.43 days 14.06 days 49.10%
Duration (Days)
46
4.6.1 IGP in review Despite some weakness in the spot gold market, IGP has continued
to live up to its mandate, with outperformance relative to the
IGP Fund GLD Benchmark benchmark in almost every conceivable measure, including a superior
Annualized returns (since inception) 5.6% -3.85% Sharpe ratio, a lower maximum drawdown, and most importantly,
Standard deviation: 0.18 0.22
better annualized returns since inception (and over this past quarter).
Sharpe ratio: 0.4 -0.09
Capitalizing successfully on arbitrage opportunities that present
themselves in the digital gold markets was the key driver of this
Max drawdown: 16.55% 18.77%
outperformance over the past quarter, which we expect to continue
Fund launch date: 21 April 2020
going forward.
Management fees: 0.75% p.a
47
RENEWABLE ENERGY
48
4.7.1 EMS in review The Fund aims to make a positive social impact by directing much-
needed capital towards efficient, profitable, and sustainable power
generation in developing markets. This environmentally conscious
EMS fund
product is currently targeting solar projects in emerging markets,
Annualized returns (since inception) 17.22%
most notably South Africa, that generate internal rates of return of
Standard deviation: 0.06
11-12% over a 20 year period in their respective currencies. Due to
Sharpe ratio: 2.9 the illiquidity of these investments, coupled with the relatively small
Max drawdown: 3.22% amount of assets currently under management, the Invictus Capital
Fund launch date: 13 November 2019 team has maintained a high level of liquid USD denominated holdings
Management fees: 0 (invested into IML) in order to prevent any illiquidity risk to investors
Investment currencies: USDT, TUSD that may prevent withdrawals. This smoothes the return profile as
the Fund generates returns from a diverse set of currencies and
The Emerging Markets Solar (EMS) Fund continues to perform rates. Should we see demand from investors return in the form of
incredibly well. With low volatility and a high Sharpe ratio of 2.9, the new subscriptions, Invictus Capital may seek to further increase the
EMS fund has made a stellar addition to investors’ portfolios over the allocation to solar projects should conditions in foreign exchange
quarter. The marginal depreciation of the South African rand (ZAR) markets be favorable.
against the US dollar provided a very minor headwind for returns,
however the remarkable quarter for IML helped buoy performance 4.7.2 EMS outlook
over the period. ZAR depreciated 0.68% against USD over the quarter,
despite significant intra-quarter volatility. This, coupled with the Over the short term the key risk for the fund remains South Africa —
consistent returns from the underlying solar projects the Fund has where the fund’s solar investments lie — failing to effectively control
invested in, has provided a stable equity curve since Fund inception. the pandemic and restore confidence in the economy. These are
threats to the rand-dollar exchange rate, which is an important input
EMS Token NAV
when valuing the Fund’s assets.
49
Annexure
50
i. Hyperion
Investment philosophy:
The Hyperion Fund is renowned as the world’s first tokenized venture capital fund. The team at Invictus Capital has democratized an asset class
that was previously only accessible to qualified investors or institutions. Through fractional tokenization, fund participants are able to gain custom
exposure to early stage investments in the field of blockchain technology.
The Fund aims to take equity positions during seed or series A financing rounds, and partners with underlying investments through their growth
phase. The Hyperion Fund portfolio is currently composed of 99.77% equity positions, with the remainder being a combination of liquid assets.
Venture capital, by nature, is a long-term investment. We foresee most IHF token holders to therefore adopt a buy-and-hold strategy with their
tokens, in order to ride through the valuation cycles of the portfolio. Due to this, the IHF token will not be traded as a high-frequency asset like
many of the other tokens or coins in the market. The token may trade on exchange at a discount to its Net Asset Value (NAV) during periods of low
volume. The trading price, however, should be bound to the NAV of the fund due to market forces and the buy-and-burn related stimulus.
Value distribution from the fund will be tied to the token as follows:
Each IHF token represents a proportional share in the Hyperion Fund. In the case of the Hyperion Fund, the underlying assets are not liquid, and
thus, the fund cannot offer an on-demand redemption function synonymous with an open-ended mutual fund. In order for the listed trading price
of IHF (price on exchange) to track the NAV price per token (the price determined by the Fund’s managers), there needs to be some form of value
distribution to token holders that ties directly to the intrinsic value of the Fund. This is done by implementing the token buy-and-burn protocol. Much
like a share repurchase in traditional markets, the Hyperion fund will place buy orders on exchange below, and up to, the prevailing NAV price per
token. This method distributes fair value back to token holders wishing to liquidate their holdings. The accumulated tokens are then removed from
the supply, resulting in a realizable NAV price per token.
In the scenario where the IHF token is trading at a discount to NAV at the time the buy-and-burn is implemented, a number of IHF tokens in the
order book will be purchased below NAV until the prevailing spot price reaches the NAV price per token. In this case, the buy-and-burn will result in
an increased NAV price per token for remaining token holders, subsequent to the purchased tokens being removed from the supply. This strategy
51
has been effectively implemented across asset classes - from Berkshire-Hathaway to Binance’s BNB. Therefore, should a discount occur on
exchange it may present a good buying opportunity for those looking to hold over the longer term.
The purpose of the buy-and-burn is to distribute value back to token holders and allow fund participants to realize a fair value for their holding
should they wish to exit their position. For more information on how the overall value distribution to IHF token holders is conducted, please refer to
the Medium article released here.
Fund performance:
We do not publish specific ownership details of equity holdings in Hyperion as these details may allow for sensitive information to be reverse
engineered. Generally, however, it is accepted that ‘venture capital’ is defined as an equity stake of between 10 and 30% and is often paired with an
exit horizon of three to seven years.
Venture capital funds invest in private companies which are not required to publish financial reports (unlike public companies which are required to
do so) and tend to keep critical information like valuation and performance data private for competitive business reasons. We will, however, always
strive to be as transparent as possible with IHF token holders.
This report reflects the NAV per token as assessed by the Hyperion management team and fund managers as of 31 March 2021. Note that this
report has not been audited or reviewed by auditors and that the NAV calculation is determined internally using industry accepted standards. Equity
positions are held at cost, unless further equity rounds or a change in the company financials justify a revaluation.
Conservative valuation methods are always applied with discounts for lack of marketability of minority stakes. It is important to remember that
these calculations are used only as a guideline to determine the underlying value of the IHF token at the date calculated. The market value of the
token may trade at a discount or premium on exchanges subject to relative supply and demand forces.
52
Hyperion fund fees:
By comparative standards, the Hyperion venture capital fund charges significantly lower fees than traditional VC funds. The global industry
standard for private equity and venture capital fees usually follow the standard 2/20 (or even 3/30) model. That is, 2% management fees and
20% performance fees. The ongoing management fees charged by the Hyperion Fund are 1.5% per annum, accrued on a monthly basis. The
performance fee is 12.5% on the token NAV outperformance over its high-water mark on a quarterly basis. For a detailed example of how these
fees are calculated, please refer to the Hyperion Litepaper. Fees for Q1 2021 are as follows:
ii. Crypto20
Management fees:
Management fees of 0.5% per annum are charged to the fund. Fund values are recorded daily at 12PM UTC. Average fund values are then recorded
for each month. Management fees paid by the fund for the quarter are as follows:
Q1 2021 $61,226
53
EXECUTION OF FUND RULES
The fund was rebalanced on a weekly basis throughout the quarter in adherence with the fund rules. As stipulated in the fund’s whitepaper,
management decisions listed below were made to exclude a cryptoasset from the index. Where a cryptoasset is excluded, the next inline coin in
terms of market capitalization is included in the index.
Coin/Token Context
Tether (USDT), This is a stablecoin and due to the nature of the project, this was never
USD Coin (USDC) included in the C20 portfolio.
Wrapped Bitcoin This is a tokenized version of Bitcoin (BTC) that runs on the Ethereum
(WBTC) blockchain.
Ripple was excluded due to an ongoing SEC lawsuit that risks a liquidity
Ripple (XRP)
crisis on reputable exchanges.
Klaytn entered the top 20 following a parabolic rise and was excluded
Klaytn (KLAY)
due to liquidity concerns. KLAY has since dropped close to 50%.
We manage to minimize slippage in the weekly rebalancing by employing the following strategies:
• Rebalancing automatically across all exchanges with best prices being executed first.
• Executing trades across multiple exchanges in order to minimize our impact on market prices.
• Preventing front running by reporting the rebalance portfolio after the completion of rebalancing trades.
54
Q1 2021 Statistical Summary
Operational Statistic
Rebalances performed 13
New coins included UNI, THETA, FIL, LUNA, DOGE, SOL, KSM, FTT
Coins falling out of the index BSV, XMR, EOS, XEM, XTZ, LEO, CEL, NEO
Best performing coins (change in market capitalization rank) SOL(+109), LUNA(+45), DOGE(+30)
Worst performing coins (change in market capitalization rank) LEO(-27), BSV(-17), XMR(-11)
Number of assets in index capped 4 (ETH, BTC, LTC, DOT) at the beginning of the quarter
by 10% weighting rule. 5 (ETH, BTC, BNB, ADA, DOT) at the end of the quarter
Management fees:
Management fees of 1%, a custody fee of 0.5% and an admin fee of 0.2% are charged to the fund per annum. Fund values are recorded daily at
12PM UTC. Average fund values are then recorded for each month. Management fees paid by the fund for the year are as follows:
Average fund Value Management Fee Custody Fee Admin Fee Total expense
Month
(USD) (USD) (USD) (USD) (USD)
56
Margin lending returns for Q1 2021
March 0 10,091,592
During periods of extreme volatility, the rebalance is triggered by a market cap change of 25% within a week. Due to the extreme upside seen over
the past quarter, the fund’s assets were not lent out midweek due to the risk of them being lent out and hindering the rebalance procedure. The dou-
ble-digit returns are significant enough to justify foregoing lending returns under these temporary circumstances.
Coin/Token Context
This is a stablecoin hence it does not form part of C10’s crypto holdings.
Tether (USDT)
However, from time to time it is held as part of the cash portion of the fund.
Ripple was excluded due to an ongoing SEC lawsuit that risks a liquidity crisis
Ripple (XRP)
on reputable exchanges.
57
We manage to minimize slippage in the weekly rebalancing by employing the following strategies:
• Rebalancing automatically across all exchanges with best prices being executed first.
• Executing trades across multiple exchanges in order to minimize our impact on market prices.
• Preventing front running by reporting the rebalance portfolio after the completion of rebalancing trades.
Rebalances performed 14
BCH(-4),
Worst performing coins (change in market capitalization rank)
LTC(-3)
58
iv. Invictus Margin Lending
Loan Statistics for Q1 2021 Fee breakdown for Q1 2021
% Change versus Average fund Value Management Fee Performance Fee Total Fees
Month Q3 2020 Q4 2020 Q1 2021 Month
previous quarter (USD) (USD) (USD) (USD)
Percentage of
19.02% 13.89% 13.45% -0.44% Q1 2021 $4,887,631 $22,945 $38,048 $60,993
Offers Accepted
Average Loan
12.17 days 9.43 days 14.06 days +49.10%
Duration (Days)
As per the fund’s litepaper, a 2% annual management fee on The Edge of Automation
the fund’s Net Asset Value is accrued daily to ensure equitable
treatment of investors. An incentivizing performance fee is set on The execution of IML’s lending is automated via Invictus Capital’s
returns in excess of the fund’s annualized hurdle rate of 6%, should proprietary lending software. Automation is paramount to the
it overcome the high-water mark. IML’s high-water mark is the peak fund’s exceptional performance as it allows 24/7 deployment, near-
value the fund has achieved, measured as the highest IML token instantaneous execution and monitoring of the entire search space
price. The application of the high-water mark to the hurdle rate for optimal lending rates. Nevertheless, no automated deployment is
means that the hurdle rate over an accrual period is calculated not complete without manual intervention in the form of close monitoring
from the token price at the beginning of the period, but the highest and gradual improvement of the software, which is conducted by Invictus
ever token price up to that point (though the two aren’t necessarily Capital’s talented team of analysts and technicians.
59
v. Invictus Gold Plus
Management fees:
Management fees of 0.75% per annum are charged to the fund. Fund values are recorded daily at 12PM UTC. Fees are accrued in the net asset
value of the fund on a daily basis and paid monthly. Management fees paid by the fund for the quarter are as follows:
Performance fee:
A 20% performance fee is charged on fund performance over and above the benchmark returns. The IGP benchmark is currently the SPDR GLD ETF,
listed on the New York Stock Exchange. The GLD is one of the largest and most cost-effective means of obtaining gold exposure in the world.
Month Average fund Value (USD) Management fee (USD) Performance Fee (USD) Total Fees(USD)
60
Disclaimer
This report does not constitute investment, legal, tax or other advice and is supplied for information purposes only. The information, data, analyses,
and opinions presented herein are provided as of the date written and are subject to change without notice. Every effort has been made to ensure
the accuracy of the information provided, but Invictus Capital makes no warranty, express or implied, regarding such information. The information
presented herein will be deemed to be superseded by any subsequent versions of this commentary. Except as otherwise required by law, Invictus
Capital shall not be responsible for any trading decisions, damages or losses resulting from, or related to, the information, data, analyses or opinions
or their use. Past performance is not a guide to future returns. The value of assets within Invictus Capital funds, as well as the fund tokens, may go
down as well as up and token holders may not get back their value purchased. Reference to any specific security or token is not a recommendation
to buy or sell that security or token. This document contains certain forward-looking statements. We use words such as “expects”, “anticipates”,
“believes”, “estimates”, “forecasts”, and similar expressions to identify forward-looking statements. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual results to differ materially and/or substantially from any future
results, performance or achievements expressed or implied by those projected in the forward-looking statements for any reason.
61