Bitcoin is the oldest and most established cryptocurrency. At just over a decade old, it has already left an indelible mark on the world. The earliest investors in Bitcoin have been offered truly outstanding returns. An investment just five years ago would have returned well over 20 times the initial capital.
Bitcoin enjoys a first-mover advantage as well as substantial brand recognition, and it remains a popular investment choice for new market entrants. In historical terms Bitcoin has demonstrated low correlation to major asset classes such as equities, bonds and commodities. It can therefore offer superior risk-adjusted returns compared to more traditionally-oriented portfolios. A key aspect of Bitcoin is its scarcity and it can thus translate to a store of value for investors. With a current market capitalization of less than 5% of gold, there is significant room for Bitcoin to capture a larger share of global wealth. Bitcoin's property of scarcity can also serve as a bulwark against the inflationary pressures faced by fiat currencies and other risks associated with the traditional financial system.
The IBA Fund offers the benefits of Bitcoin with reduced volatility - a concern which acts as a barrier to entry for many investors. This Fund is suitable for those who desire long-term exposure to Bitcoin, but with the peace of mind that comes with knowing the maximum drawdown in any given month is targeted to be just 10% of the US dollar value of the Fund. This is achieved through an OTM put option. In addition:
- No management fee will be charged by the Fund
- Portfolio margin agreements allow the fund to engage in lending activities of the USD collateral to generate interest returns as per the Invictus Margin Lending (IML) Fund. These yields will be applied to offset the cost of the purchased put
- The Fund will also offset the cost through sale of OTM call options. The premium received from the sale of the call option helps to pay for the put option cost while capping the maximum fund gain to 30% for a given month
- Backtested performance of the fund strategy over the past two years shows strong outperformance against the Bitcoin spot price, particularly in market drawdown