Invictus Margin lending fund


I’ve been watching Invictus Capital as a company since 2018. They were one of the first companies to create investment funds in the cryptocurrency space. They started with a venture capital fund called Hyperion. Following this they created a couple of tracker funds, C20 and then C10 hedged. The next fund they created is the IML fund. IML stands for Invictus Margin Lending fund and this is the one that really interests me. Since launching the IML fund they have gone on to create an Emerging Markets Solar fund, a Gold Plus fund and a Bitcoin Alpha fund. I am only invested in the Margin Lending (IML) fund.

It’s based on margin lending USD stablecoins, so avoids the volatility of other crypto assets. This investment should perform regardless of what the broader crypto market is doing.

Although not creating income as such, it does have a steady increase in NAV. At the point that I would like to use it for income I can cash in a proportion of my holding equivalent to the raise in value.

The blurb from the platform…

“The stablecoin lending market yields high interest rates by providing short-term, collateralised loans to traders. These loans are liquidated before any losses are realised, leaving the fund with no anticipated downside risk.”

How does it work?

The fund started with a seed investment. At this point the fund was divided and represented by tokens worth $1. This is equivalent to shares in an investment fund in the regular financial markets. The fund is then invested in the margin lending markets. The traders that borrow the USD stablecoins pay the loan back with interest, growing the value of the fund. As the fund grows, the NAV grows and so does the value of each token.

When you invest money in the fund, you are allocated a number of tokens equivalent to the value of your investment, based on the NAV of each token. This money is then added to the fund.

When you withdraw from the fund, you exchange your tokens for their current value.

My journey with the IML fund

In November 2019 I made my first investment into the IML with $200. Every month since then I have made a regular $200 investment, up until November 2020. At that point I stopped investing a regular small amount. The ETH mining fees for buying the tokens were excessively high and so to mitigate this I have since decided to make larger investments less often.

As of January 1st 2021 I have invested a total of $2600 and the value of my investment is $2796. The graph below represents the monthly rise in value of my investment.

Overall I am delighted with the performance of this investment and plan to invest further into this fund.

Other Funds from Invictus

Hyperion Fund. This is a venture capital fund that has invested in Crypto start-ups. High risk-high reward, which looks to be doing well. It’s token trades significantly below NAV which means you could pick up a bargain, but your funds are locked up for a number of years unless you are willing to cash out on the open market below NAV

C20 is a straight forward tracker of the top 20 coins. I already hold a number of the top coins that I believe in. For me this holds no advantage.

C10 Hedged holds the top 10 coins and also uses an algorithm to hedge against downward trends. A good fund but as I am already exposed to the top coins I see little advantage.

Emerging Markets Solar fund invests in projects on The Sun Exchange. As I am already invested in The Sun Exchange this would be a duplication of my exposure. The only advantage would be the liquidity that would allow me to exit my investments.

The Gold Plus Fund aims to track the value of gold, with the added advantage of reducing drawdown when the market turns bearish.

Bitcoin Alpha is a fund that hold Bitcoin but has an algorithm that limits the exposure to the volatility of the asset by transferring some of the funds to stablecoins when there are periods of high price changes. This limits both upside and downside volatility. I am a long term holder of BTC and don’t see the necessity to add this to my portfolio.