Exposure to the top ten cryptocurrencies by market capitalization offers investors significant diversification benefits, providing peace of mind and relieving the pressure on investors within the complex, volatile, and unpredictable crypto market. Crypto10 Hedged, an investment fund managed by Invictus Capital, offers investors this diversified exposure through ownership of a single token, C10, with the added benefit of a cash-hedging mechanism. The function of this hedging feature is to limit drawdown during periods of falling prices while still participating in the massive upside offered by crypto investments. This algorithmic approach has been designed and optimized by Invictus Capital’s experienced quant team using knowledge and data gleaned from both bull and bear markets.
Crypto10 Hedged stands out against other cryptocurrency investment offerings for several reasons.
Diversified Crypto Exposure, Eliminating the Need to Pick Winners
John C. Bogle, the father of modern index investing famously said “Don’t look for the needle in the haystack. Just buy the haystack!” This index investing philosophy has proven to outperform actively-managed funds in traditional markets and is a mantra adopted by C10. The fund is made up of the 10 largest cryptocurrencies by market capitalization. Both the cash hedge and the weightings of the individual assets are adjusted weekly in response to prevailing market movements. To limit concentration risk, each individual asset is capped at 15% of the fund. All crypto assets are assessed by our expert analysts to exclude coins with no fundamental value proposition, as well as stable coins such as Tether. The current composition of the fund can be found here.
Ultimately, this strategy provides a solution to the common stress and research burden on investors to pick winning coins, rather than aiming to benefit from the broader upside in this fast-growing industry.
Downside Protection and Smoothed Volatility
In comparison to traditional markets, crypto-assets are subject to far greater levels of volatility and unpredictability, with periods of upside often followed by sharp selloffs and sustained downtrends. The fund’s cash hedging mechanism aims to allow full crypto exposure during bull markets while pivoting (partially or fully) into cash to limit drawdown during periods of market weakness.
March 12 was perhaps the best demonstration of this value proposition yet. Bitcoin collapsed by almost 40%, taking the entire crypto market with it. Meanwhile, over 90% of C10 was hedged in cash, with the fund only suffering a 2% decline on the same day.
Furthermore, the fund makes its cash holdings work for investors by allocating it to the Invictus Margin Lending Fund, which has generated more than 12% (net of fees) since its launch in August 2019.
The overall effect of the strategy is a fund that smooths the volatility inherent in traditional crypto investments, while still capitalizing on the massive upside still to be realized in the medium- and long-term. This is evidenced by the performance relative to the benchmark, which has no cash hedge.
Easily Accessible, and Highly Liquid
Investors can access Crypto10 Hedged through Invictus Capital’s investor portal which interfaces with the fund’s smart contract. It is designed as an open-ended fund, meaning that new investors can always be subscribed to the fund at the prevailing token price (which reflects the underlying value of tokens held by the fund). These subscriptions and redemptions are processed hourly, including weekends, and both incur a nominal 0.5% fee. Subscriptions can be made using a range of crypto or fiat payment options (with no minimum investment), while redemptions are paid via a smart contract in Ethereum. Investors maintain full control of your tokens, with them being issued to an Ethereum wallet of their choosing.
In summary, Crypto10 Hedged offers investors a chance for long-term capital gains, while reducing short-term volatility. The design of the fund is ideally suited to generate capital gains throughout the full market cycle, capitalizing on the market’s gyrations rather than falling prey.
Learn more about Crypto10 Hedged
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