We are excited to announce the official launch of the Invictus Margin Lending fund. The IML token is now available to investors in the Invictus portal.

Margin lending allows traders who put up collateral to leverage their positions. Interest is paid daily by the trader to the lender. The fund aims to maximize interest income on USD and USD equivalents with minimal anticipated drawdown risk.

The Invictus Margin Lending (IML) fund strategy is to offer dollar-based loans on exchange margin lending platforms. The fund has been live since 13 August 2019 with a seed investor base.

The fund is now available globally via our fully automated investment portal which enables self-service investment with no minimums.

Performance to Date

IML Fund NAV vs. the hurdle rate (6% p/a)

Returns have exceeded the hurdle rate since inception, with consistent net returns at rates of approximately 11%. The volatility of the crypto market has once again begun to climb in the fourth quarter of 2019 (Coin Insider, 2019) which is anticipated to drive lending interest rates higher. This should bolster the performance seen in recent relatively flat market conditions.

The Invictus Margin Lending Fund’s returns to date have out-competed similar offerings, see below:

Background

BTC 30-day volatility (2019) — Coinmarketcap.com

There are multiple reasons to invest in a margin lending fund:

Crypto lending is a rapidly growing industry , with 145.70% quarter on quarter growth in loan originations (Graychain, 2019).

, with 145.70% quarter on quarter growth in loan originations (Graychain, 2019). The demand for loans is driven by both the growing number of investors using crypto to collateralize loans, as well as the persistent volatility in the crypto market which presents opportunities for leveraged traders. This demand drives interest rates higher.

Market volatility is expected to continue due to a variety of factors, including the early stage of market development, 24/7 trading, low liquidity compared to traditional markets (which can lead to aggressive price fluctuations) and the speculative nature of market participants. This, in turn, increases the demand by leveraged trades, which drives higher interest rates on dollar-based loans.

due to a variety of factors, including the early stage of market development, 24/7 trading, low liquidity compared to traditional markets (which can lead to aggressive price fluctuations) and the speculative nature of market participants. This, in turn, increases the demand by leveraged trades, which drives higher interest rates on dollar-based loans. The Invictus Margin Lending Fund offers investors the ability to take advantage of the volatile nature of the cryptocurrency market without risking direct exposure .

. USD margin lending returns offer diversification benefits to traditional asset portfolios and has exhibited low or negative correlation with traditional assets (including the S&P500, gold and even bitcoin).

Correlation matrix (Margin lending rates vs. S&P500, BTC, GLD, TNX, VIX) — Invictus Capital

Fund Summary

The fund only holds USD or USD-equivalent stablecoins.

Fund capital is lent out to traders, who borrow these assets primarily for leveraged trading.

There is on-demand liquidity for IML token holders, who are able to invest or redeem from the fund on a daily basis in TrueUSD (TUSD).

Interest on margin lending positions is paid out daily, which leads to a favorable compounding effect.

There is a 2 and 20 fee structure (2% management fee and a 20% performance fee). Performance has a hurdle rate of 6% (the US Investment Grade Corporate Bonds rate).

There is minimal expected drawdown risk.

A substantial potential benefit to investors is that of tax efficiency as fund returns would likely be taxed as capital gains tax instead of the income tax applicable to individual lending activities. Capital gains tax is often significantly lower than income tax but this varies by jurisdiction.

The primary risk is counterparty risk, which is mitigated by lending across multiple exchanges and stablecoin types. In addition, margin lending exchanges have substantial in-built risk controls which ensure that traders are prevented from ever having a net negative equity position. In extreme market events, there are substantial insurance pools which are used to refund lenders.

How Investment Works:

The fund is open-ended and offers liquidity daily.

TUSD (TrueUSD) is the only accepted investment currency. Fiat onboarding is available via Trust Token. TUSD is available on most major exchanges such as Binance, HitBTC, Bittrex and Bitfinex.

Please click here to access the investor portal. For any questions, please click here to join our Discord and speak directly to the team.

Thank you for your ongoing support as we continue to innovate and develop new funds across more diverse asset types.

Kind Regards

The Invictus Capital Team

References

S&P Dow Jones Indices, S&P 500 Investment Grade Corporate Bond Index, 2019.

Coin Insider, 2019. Crypto Volatility Returns Led By Ethereum Which Jumped Over 6%.

Graychain, Crypto Credit Report Q2 2019.

Investopedia, 2019. Banks That Pay the Highest Interest Rates on Savings Accounts.