The digital assets fund from trading firm Two Prime grew by 26.94% in August, more than double the 12.35% gain of BTC in the same month.
The Two Prime numbers come as total assets under management (AUM) of crypto hedge funds globally increased to nearly $3.8 billion in 2020 from $2 billion the previous year, according to a PwC report.
The fund, which has assets under management of $40 million, saw year-to-date returns through the end of August rise 183% (net of fees) vs. bitcoin’s raw gain of 62%. The trailing 12-month returns of the fund through Aug. 31 jumped 537% (net of fees) vs. bitcoin’s 313% rise, according to a source with direct knowledge. The Digital Assets Fund uses a derivatives overlay to hedge net long BTC and ETH delta exposure, according to an investor deck.
The fund’s outperformance comes as the median crypto hedge fund gained 128% last year and 30% in 2019, according to the PwC report. The average AUM for this year’s surveyed funds increased to $42.8 million from $12.98 million.
“Despite the recent news of China banning crypto… again, options skews on ETH and BTC are still leaning bullish for most of the durations into end of year and beginning of next year,” Two Prime Chief Investment Officer Nathan Cox said over Telegram.
The fund announced that it will increase its performance fee to new investors in the Digital Assets Fund to 16% from 10% starting in January. The fund’s 2% management fee will remain.
Two Prime, which also operates another fund called Liquid Yield Fund I, was founded by managing partner Alexander Blum.