Invictus Capital is proud to report that we are well into the process of transitioning the Invictus suite of investment funds into a regulated fund structure under the Cayman Island-domiciled Invictus Capital Financial Technologies SPC, with the funds managed by Invictus Asset Management — the recent recipient of an asset management license in the British Virgin Islands. As part of this regulatory migration, which we believe will support greater takeup of our innovative investment products and drive rapid expansion of AUM, the difficult decision has been taken to close down the Emerging Markets Solar (EMS) and Invictus Gold Plus (IGP) Funds.
Blockchain technology has the potential to transform the asset management industry but carefully designed regulations and well-defined investor protections are essential to ensure the long term success of this market. Once the regulatory process is successful, Invictus Fund Tokens will become the world’s first regulated tokenized investment funds. This new fund structure will give Invictus invaluable legitimacy in the fast-moving crypto space where trust and security are paramount. While moving to a regulated fund structure is crucial to the company’s long-term success, it does, unfortunately, come with additional cost burdens for each of the Funds in the form of legal, audit and other administrative costs. These costs all aim to make the funds safer and more transparent for investors, however, funds with a small amount of assets such as EMS and IGP cannot absorb the costs effectively without impacting investor returns.
As a result, the viability of our two smallest funds, EMS and IGP, have come into doubt as the Total Expense Ratio (TER) will be too high given the minimum ongoing fees. Alongside concerns stemming from audit fees and compliance costs, both funds also suffer from liquidity constraints that hamper the ability to operate as mutual funds. The markets for digital gold tokens tend to be illiquid — while interacting with digital gold companies such as Tether or Paxos tends to be a cumbersome process.
EMS suffers from similar concerns, but liquidity constraints are even more pronounced. This is because no secondary market currently exists for the resale of solar cells purchased by the fund — a key reason that the fund’s assets have been dominated by holdings of IML, our yield-bearing fund, in recent months.
What does this mean for existing investors in EMS and IGP?
Current investors in both the EMS and IGP funds do not need to do anything (read on to see how you will be affected).
As of Tuesday 14 September 2021, investments into the EMS and IGP funds are no longer permitted. Pending EMS and IGP investments will, however, still be processed.
Investors who opt not to redeem their IGP or EMS investments by Wednesday 29 September 2021 — the date of fund closure — will receive the dollar value of their EMS/IGP holdings in IML Fund tokens, with an additional 1% bonus as a sign of appreciation for your loyalty and understanding.
These IML tokens will be sent to the blockchain wallet that holds the EMS and IGP fund tokens on Wednesday 29 September 2021. IGP and EMS tokens then become unbacked, and worthless.
EMS and IGP Fund tokens staked for ICAP will receive IML Fund tokens (unstaked) to the Invictus Wallet address linked to the account and will stop accruing ICAP rewards from fund closure. Unclaimed ICAP will remain, available for claiming, in the staking vault.
Timeline of fund closure
14 September 2021: New investments into EMS and IGP halted. Redemptions still continue.
23 September 2021: EMS and IGP redemptions are halted.
29 September 2021: Investors receive the full value of their EMS and IGP investments (plus 1%) in IML tokens. EMS and IGP tokens cease to have any economic value.
Exciting new fund announcement
Invictus is dedicated to bringing our clients the most innovative investment products, and preparation is already underway to develop exciting new funds to replace them — the first of which will be a crypto fund targeting the fast-moving Decentralized Finance space. Read our Medium announcement for more details.
Invictus Capital aims to be at the forefront of the next generation of asset management firms and is committed to continuing to lead the way in compliance standards for crypto funds. Follow us on Twitter, subscribe to our mailing list, or reach out to our team directly on Discord to stay up to date with internal developments.