Forteus says ‘less competition’ is good for traders

The firm, backed by Schroders in 2022, has told institutional investors that a multi-manager approach is the way to go

article-image

Pavel1964/Shutterstock modified by Blockworks

share

Institutional crypto asset manager Forteus has launched its first two funds, rolling out a long-only and multi-manager vehicle.

Those strategies represent bets on both digital assets bouncing back and the prowess of outside managers to navigate choppy markets.

The London-headquartered Forteus has locked down some $50 million of investor capital and commenced trading its first commingled vehicles on June 1, according to a source familiar with the matter and investor communications obtained by Blockworks.

For the London-headquartered Forteus, a subsidiary of the Numeus Group, the commingled vehicles have evidently been in the works for some time — taking into account the fact that the firm in July 2022 sold an undisclosed minority stake to the $746 billion asset manager Schroders.

A spokesperson for Forteus declined to comment, citing private placement regulations on institutional funds. The firm also publishes research, including dives into the dealings of other crypto hedge funds

In a recent investor letter, Numeus detailed its multi-manager strategy, Forteus Multi-Manager Alpha Fund (MMA), touting “less competition” in markets for traders, given “several players” having “closed shop or ceased their crypto activities.” 

Forteus said the “significant market rotations” last month indicated “encouraging stronger levels of activity,” which the firm said it had “not observed since the FTX collapse back in November 2022.”

The investment play and associated opportunity set, as outlined by Forteus President Nicolas Vanhoutteghem and his team in the letter, harkens back to “the early days of hedge funds” when a “diversified multi-manager approach” offered the “most effective gateway for investors.”

Vanhoutteghem previously worked for Bain & Company, among a number of other firms.

The fund backs managers who run market-neutral strategies and highlighted statistical arbitrage strategies as a top performer in June, when MMA gained 0.7% in its first month of trading through a “market that was rocked by regulatory uncertainty and that saw significant regime shifts.”

Thomas Chladek, its head of external manager research and selection, previously spent 11 years working in the funds-of-funds unit for Lombard Odier’s Geneva office. An additional in-house team contributes to the fund’s operations.

Read more: Crypto hedge funds expect digital assets will be up by the end of the year 

The vehicle through June had deployed about 40% of its capital to five undisclosed portfolio managers, the letter said. Chladek and his team backed an additional two managers on July 1, bumping up that figure to 50% — a move that suggests relatively conservative check sizes, given available assets. 

“Emergence of new arbitrage strategies” 

Forteus has been shopping around its second vehicle, a long-only strategy focused on mostly established tokens with ample market liquidity. But the firm is also pursuing emerging tokens that could deliver more outsized upside. 

Additional details about that still-developing strategy weren’t immediately clear. But it appeared to fit into Numeus’ broader plans to diversify the offerings pitched to prospective limited partners under the direction of Nobel Gulati, the former chief executive of Two Sigma Advisers. 

Ryan Ebner, who previously worked as an analyst for Schroders, has been tapped as the portfolio manager for the long-only fund, dubbed Digital Asset Select.

The firm acknowledged in its letter that “the last year has been unequivocally challenging for crypto managers,” taking into account “the fallout from the events of 2022,” which have “tested market neutral and trading oriented managers across several dimensions.”

Gideon Berger, a former co-chief investment officer for Blackstone’s alternative investments unit and Forteus’ non-executive chair, told Blockworks in a statement that “digital assets are creating a wide set of investment opportunities, from innovative early-stage applications to a broad range of trading strategies in inefficient and fragmented markets.”

The state of cryptocurrency markets “in many ways” reminds Berger of “the early days of the hedge fund industry,” he said.

Updated July 14, 2023 at 10:09 am ET: Clarifies Chladek’s title, as well as Vanhoutteghem’s work experience.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

MON - WED, MARCH 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience:  Attend expert-led panel discussions and fireside chats  Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts   Grow your network […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

logo.jpeg

Research

Akash is a general-purpose compute platform with GPUs, storage, LLM training or inference, and validator hosting through its two-sided marketplace.

article-image

The SEC could allow half a dozen or more such funds to launch at once, Ark Invest CEO says

article-image

2023 saw a decline in a16z crypto funding, but the behemoth VC firm teased what it’s excited for next year

article-image

“Iran Unchained” launched a new version of its grant platform to make donations to activists easier

article-image

The stablecoin marks the first time a regulated European bank has made a euro-pegged stablecoin available on a crypto exchange

article-image

Build it and they will come, perhaps, but making crypto easier to use is turning out to be just as important

article-image

Amid moves by Itau Unibanco and Nubank, the country could serve as “a proof of concept” for TradFi-crypto integrations, industry research exec says