This performance comparison presents some of the well-performing crypto funds in July 2023, classified per strategy. The data is based on the 21e6 Crypto Fund Database. After a rather subdued half-year report 2023, which revealed that crypto funds across the board underperformed passive benchmarks, we revisit the topic to see if active funds were so far a good investment in the first month of the second half of 2023.
Photo: Ono Kusik
Table of Contents
- After a Lackluster First Half of 2023, Only One Third of Discretionary Funds Achieved Positive Returns in July
- Among Long-Short Futures Funds, the Numbers are Even Worse With Only ¼ of Funds Avoiding Losses
- Quantitative Funds Outperform Other Strategies, With 90% Outperforming Bitcoin in July 2023
- Decoding the Performance Disparities Across Strategies
- Conclusion & Outlook
The recovery in broader crypto markets in the first half of the year 2023 was not continued in July, with Bitcoin losing more than 4%. The good news is that down markets have the potential for crypto funds to differentiate themselves by being more stable than passive benchmarks.
In this short analysis, we present you with the funds that managed to lead their respective class of strategies and hold up relatively well in this difficult month.
We define the terms of the 21e6 Strategy Classification used for our analysis in the table below this article.
After a Lackluster First Half of 2023, Only One Third of Discretionary Funds Achieved Positive Returns in July
The first half of 2023 might have been unremarkable, but come July, only a third of the funds operating under the directional-discretionary strategy banner posted positive returns. The remaining two-thirds, predictably, faced the brunt of Bitcoin's downturn.
Among the discretionary strategy frontrunners for July were:
- Pantera Liquid Token Fund
- Off the Chain
- Apollo Capital Frontiers
A tip of the hat to these fund managers for defying the bear!
Among Long-Short Futures Funds, the Numbers are Even Worse With Only ¼ of Funds Avoiding Losses
The narrative for long-short futures funds in July 2023 was, regrettably, worse than for their discretionary peers. While these funds often tout the capability to yield returns irrespective of market direction, the reality in July looked somewhat different. A staggering 80% of these funds faced losses, and over 60% of these managers did worse than Bitcoin's 4% dip in July.
Here are three funds that were among the better 20% in July:
- MaiCapital Blockchain Opportunity Fund
- Hilbert V30 Fund
- Maven M11 Liquid Token Fund
We hope that their systematic approaches will yield persistent overperformance over the coming months as well.
Quantitative Funds Outperform Other Strategies, With 90% Outperforming Bitcoin in July 2023
Quantitative funds held relatively high cash and stablecoin positions in July, which explains why 90% of them outperformed Bitcoin, which is a good accomplishment for this fund benchmark. However, only about 30% were able to achieve postive returns. Most funds are sitting at minor monthly losses.
The shining examples of good trading discipline in July 2023 are:
- Pythagoras Crypto Directional Trading Fund (Momentum Strategy)
- Trovia Digital Asset Fund (DAF)
- Florin Court Capital Crypto Programme
Decoding the Performance Disparities Across Strategies
The performance variations observed in July 2023 across different benchmarks can be primarily attributed to the distinct exposures each strategy adopted.
Discretionary Funds: As the markets began their upward trajectory over the year, discretionary funds increased their exposure accordingly. A notable portion of these funds had significant investments in altcoins. Given that altcoins, in general, underperformed in July when juxtaposed against Bitcoin, it's no surprise that the overall performance of discretionary funds was adversely impacted.
Long-Short Funds: These funds are more agile in managing their exposure and adjusting to changing conditions. Hence, their underwhelming performance in July is somewhat surprising It's plausible to infer that the market's volatility and unpredictability (choppy markets) is the scapegoat. The absence of clear market trends made it challenging for these funds to generate returns.
Quantitative Funds: Similar to long-short funds, quant funds can adjust their exposure quickly. A big difference is that these managers are very restrained in their use of short positions. Furthermore, we see many long-short funds use momentum as their main indicator. Momentum was not a good help for traders in July, so quantitative funds with more diverse strategies were rewarded for their low exposure to momentum factors.
Conclusion & Outlook
We applaude those funds mentioned above that defied the odds of July’s suboptimal performance. In sideways, slightly negative months such as July, most funds fell through the cracks and performed negatively – and often worse than Bitcoin. Therefore, we are even more excited to see these positive outliers.
As people familiar with these funds know, some of these funds consistently stay ahead of the market month-after-month.
In our next analysis, we will focus on funds from other strategy classes.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as investment advice, endorsement, or recommendation. Consult a qualified financial professional before making any investment decisions. Neither the authors nor 21e6 Capital shall be liable for any loss or damage arising from reliance on the information contained herein.
21e6 Capital is a Swiss investment advisor, connecting professional investors with optimal crypto investment products.
Please find more information about our authors on our homepage: 21e6.io
Jan Spörer is Due Diligence Manager at 21e6 and responsible for overseeing the content quality management of the 21e6 Crypto Fund Database.
Maximilian Bruckner is Head of Marketing & Sales at 21e6 Capital AG.
21e6 Crypto Fund Database, cryptofunds.21e6.io
* Please find the strategy definitions in the table below:
Directional discretionary strategies rely on portfolio manager's manual analyses. They do not follow an automatable pattern. An example of this would be non-systematic tokenomics analysis and macro analysis.
Directional long-short futures strategies buy and sell futures or swaps (with fixed end terms or perpetual futures or swaps), often based on momentum strategies. These strategies are often systematic, but don't need to be.
Directional quantitative strategies are systematic strategies that do not fall under the long-short category. The strategies can be expressed as computer code and thus executed without human intervention.
Directional: Early Stage
Directional early-stage strategies are discretionary strategies focused on newer, small tokens. Portfolio managers seek to identify promising tokens early on.
Directional: Multi Strategy
Directional multi-strategy portfolios cannot be classified in just one of the previous buckets.
Non-directional arbitrage means that the trader only takes positions that counter each other. Movements in the overall market do not affect these strategies. Only the relative prices of the two traded assets may impact the profitability of arbitrage trades. There are different levels of neutrality among arbitrage strategies. Some come with higher market risk and others with lower market risk. Despite their non-directional nature, heavy directional market movements may impact some of these strategies.
Non-directional: Lending, Farming
Non-directional lending and farming utilizes interest-bearing strategies.
Non-directional: Arbitrage: Futures
Non-directional arbitrage futures strategies do arbitrage specifically in futures markets.
Non-directional: Multi Strategy
Non-directional multi-strategy portfolios use multiple of the above-mentioned non-directional strategies at once.
Directional: Fund of Funds, Multi Fund, Multi Manager
Directional fund of funds are funds that invest into other funds. Instead of making direct investments, these fund only indirectly invest by choosing other fund managers.
Non-directional: Fund of Funds, Multi Fund, Multi Manager
Non-directional fund of funds are funds that invest into other funds. Instead of making direct investments, these fund only indirectly invest by choosing other fund managers.
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