On May 9, the management company Arquant Capital obtained approval from the AMF to market a portfolio of funds for professionals, 100% invested in cryptocurrencies. It is the first asset manager, in France, approved by the Financial Markets Authority for actively managed funds invested directly in cryptocurrencies, and the first to be exposed to Ethereum.
Already several regulated funds
In 2019, Napoleon AM became the first regulated crypto fund in France. Unlike the funds offered by Arquant, it does not hold bitcoin directly, but replicates its performance using structured products. Like that of Arquant, on the other hand, this fund is reserved for professional and institutional investors.
In 2017, Tobam was the first to launch, with an unregulated fund invested 100% in bitcoin. It was only in 2019 that the adoption of the Pacte law made crypto-assets eligible for investment by specialized professional funds, making it possible to create regulated funds. In 2021, Tobam then paved the way for retail investment in crypto-assets, launching the first AMF-approved fund authorized for life insurance, exposed to bitcoin and international corporate stocks. whose activity is related to blockchain and bitcoin.
Combination of algorithmic and human management
Arquant’s proposal is primarily aimed at family advisers, private banks and wealth management, for wealthy investors and with a view to long-term investment. As a general rule, she advises not to exceed 5% of the asset allocation in cryptocurrencies, which is of interest in a diversification strategy because they are very little correlated to other asset classes. The company’s objective is to reach around one hundred million euros in assets under management by the end of 2022.
Arquant’s model combines algorithmic management and discretionary management, “in order to support the need for this very risky asset class”, explains its president Eron Angjele, who worked for Caisse des Dépôts and Banque Postale Asset Management. The objective is to achieve returns above that of the 5-year underlying, with a minimum value. For this, its management teams are made up of professionals in asset management, blockchain and quantitative finance.
Before embarking on collective management, the company offered management mandates, on which it claims to have obtained double-digit performances since the beginning of the year.
The crash, a “good thing” to clean up the market
Arquant Capital will be the first management company to launch an Ethereum fund. It is even on this cryptocurrency that the company, founded in 2019, tested its model. A protocol in which she believes because “Ethereum will be the collateral of Web3, and its scope is very, very broad”says Eron Angjele. “Furthermore, moving the protocol from proof-of-work to proof-of-stake will improve the speed and energy balance of this blockchain.”
Bitcoin and Ethereum have crashed in recent months. Bitcoin hit its lowest since 2020 on June 13, at 22,400 euros. And Ethereum is trading below 1,200 euros, down more than 70% from its peak in November 2021.
According to the founder of Arquant Capital, this crash is “a good thing to test the solidity of mounts that have arrived too quickly. You have to see cryptocurrencies as small caps or emerging markets. Their trajectory is not linear, there are peaks and corrections. We are experiencing a market sanitization phase. According to our indicators, we are not far from the bottom”.
A bad timing to launch your funds? “It is better to enter the market at this price level”observes Eron Angjele.
A market segment under construction
In fact, the plunge in cryptocurrencies does not seem to cool management companies. According to Muriel Faure, senior advisor in a wealth management company and president of the Technological Innovations Commission of the French Association of Financial Management (AFG), which spoke last week in a conference devoted to crypto-assets, “bmany management companies are generated by crypto-assets”. The AFG has launched a working group with the French Association of Securities Professionals (AFTI) on this subject.
“In 2023, I think some of our members are going to be faced with requests from institutional investors. On the other hand, 34% of young people aged 18-24 are considering investing in cryptos. management have the opportunity to manage this money for them. I am convinced that management in crypto-assets will develop and that the competition will be more and more fierce”, she adds.
Arquant Capital, which employs eight people, raised €1.6 million in two phases in 2020 and 2021, and is in the process of closing a new €1 million funding round.