Dear Clients and Partners,
The month of July brought markets overall some much-needed relief after consecutive negative months (although that picture has blurred again in August). This was driven by factors such as the CPI figures indicating an easing in inflation, and from the crypto side, the crowd-built-up hype around the expected Ethereum “Merge” mega event announced for September (after having been delayed numerous times before). Double clicking on the digital asset space, it was once again telling to see how large institutions who issued plenty of negative and derogatory statements for the sector, are now doubling down on building and expanding their own capacities in the crypto space. BlackRock’s entering the ring by partnering with Coinbase to create a crypto offering, starting with BTC which was up +27% for July, sees a true heavyweight having joined the industry accompanied by the likes of JP Morgan, Goldman Sachs, Schroders, and many others. It’s almost as if standing on the sidelines is riskier than being in the middle of the scrum. The appropriately adjusted proverb “do as I do and not as I say” comes to mind. This notion was also seen in UBS’s latest family office report, where half of the surveyed family offices indicated the primary reason for them to invest into digital assets was to learn about the technology.
For July 2022, we were up by +6.65%. We continue to outperform the market YTD with +17.59% vs. BGCI and +12.19% vs. BTC at reduced volatility levels. Reviewing our aggressive positions, we saw returns in July ranging from +35% to +69% with our DeFi token investment, a position that suffered in June, leading our recovery and our defensive investments up 1.0-1.5%. While July was a good month for our underlying investments, this didn’t fully translate into our overall performance. There are 2 main reasons for this: 1) Currently, due to the unstable market environment, we have about half of our positions in more aggressive investments and the other half in rather defensive ones, giving up on some of the upside potential and 2) this month we experienced larger lags in reported returns to the actual price being updated at the bank, i.e. some positive performance is not reflected in the current price. We are constantly reviewing the market and our portfolio and will be making appropriate adjustments during the months ahead.
Finally, in addition to our certificate structure, we are excited to announce that our fund structure is now open for subscriptions! The funds will be custodied at Julius Baer and audited by Deloitte. Early investors, starting at USD 100,000, will be able to lock in aggressively lower fees with 0.5% management and 5% performance fees.
The current situation reminds me of a fitting quote from Warren Buffet: “Investing is simple, but not easy.”
Have a great day and feel free to let us know if you have any questions.
Marc and your AltAlpha Digital Team