2021 had definitely been an eventful one for cryptocurrency arbitrage funds aiming to capitalise on price inefficiency and volatility within the digital asset markets.
Reflecting on this fact, Benjamin Guez, co-founder of ARIANE CAPITAL, a multi-family office specialized in wealth management, recalls how investors were initially cautious on what they saw as the speculative, volatile nature of cryptocurrencies.
In an interview with Crypto Daily, Guez explains how fortunate Ariane Capital was to believe in crypto investment potential and develop a native crypto prospect from the beginning.
To understand how they set it up, it’s important to understand the origin of this one-stop-shop for high net worth individuals. In fact, ARIANE is one of the very few European asset managers whose expertise in cryptocurrencies dates back to 2014, which was supplemented by its regular multi-family office activities.
Guez further noted that it took a few years for them to secure a dedicated bank account and create liquidity for their clients. However, this allowed Ariane Capital to capitalise early on the momentum and to be ahead of and in sync with the whole crypto universe.
“We can draw a parallel line between the world of finance and this universe of cryptocurrencies, but the codes and the mentality remain very particular,” said Guez.
Ariane Capital’s flagship ARBA FUND has built an impressive track record with its market neutral, arbitrage-based approach to cryptocurrency trading. Using an algorithm-based trading model that fuses elements of statistical arbitrage, the fund reported a monthly return of +0.12% in May 2021. This compares with the broad crypto market that experienced losses of more than 50% during the same period.
For comparison, ARBA FUND yielded +41.75% in 2020. But for 2021, they expect to finish the year closer to +15%, mainly due to the shrinking of arbitrage gaps and opportunities.
ARIANE launches a new fund
Crypto adoption still faces hazards, such as the history of scams, the lack of awareness among mainstream audiences, and even a belief that regulators will ultimately kill the crypto hype. But Guez believes that mainstream adoption is coming with the right high-quality investment vehicles.
With these challenges in mind, they decided that the smart thing to do was to build a new fund that focuses on a bit of a different risk-reward profile.
To make sure that the company stays on the right side, as it did seven years ago, they launched ARBA SPIN, a certificate actively managed by the company’s management team. With a long-term directional objective mixing fundamental analysis of the crypto universe and the ability to seize opportunities identified within, ARBA SPIN certificate yielded +12.5% in a bear market.
ARBA co-founder attributes this solid performance to “the alpha generator qualities” of the management team, who have the internal capability to assess, structure, identify and invest in significant opportunities. They also apply a risk management methodology with existing market tools such as options or futures as the company is doubling down on investments at the intersection of cryptocurrency.
“Right now, many of our peers are jumping into the cryptocurrency world, which I think is beneficial for the industry as a whole. However, it’s worth noting that it’s a challenging world and landscape to explore: if you don’t have a strong team with years of legitimacy, it’s easy to make discerning mistakes,” Guez added.