Elwood Asset Management, which is owned by one of the UK’s wealthiest and most successful fund managers, Alan Howard, is planning to launch a $1 billion fund to invest in Cryptos.

Alan Howard, who set up Brevan Howard asset management, has not had it all his way having seen assets under management fall in 2008 from over $40 billion. In 2008 he was seen as one of the ‘movers and shakers’ globally but, by 2018, funds had fallen to $3.6 billion. However, at age 55, Howard has a wealth of experience and contacts to call on, so his latest foray into Digital Assets will be followed closely by many traditional investment houses around the world.

 

PWC and Elwood published a report earlier this year looking at the 100 largest Crypto Hedge funds and ascertained that:

• the funds managed a total of $1 billion

• 64% of the asset management firms are based in the USA, with 55% of the funds located in the Cayman Islands

• average fees are 1.74% management and 23.5% performance fee

• only 34% use leverage 

• 60% have less than $10 million under management – this size of fund would not normally be even considered by a fund of fund managers 

• 90% of funds do not use third party research –  Coinmetrics, Tokenanalyst, Vision Hill and Glassnode do offer research on Digital Assets 

• 25% of the funds have independent directors - for hedge funds, it is the norm to have independent directors 

Elwood Asset Management is building a platform which will design portfolios of Digital Assets for institutional investors. This will enable these investors to take account of factors such as the level of risk, their expectations on returns, and the liquidity. The intention is to be able to calculate the relationships with other assets they own, to customise portfolios for their clients to invest in.

Howard has already invested directly into crypto assets, including EOS developer, Block.one and the ICE-owned digital assets platform, Bakkt.

An announcement like this just had to come and is arguably strong evidence for the time now being right. The infrastructure is robust enough and developed sufficiently for the ‘Big Guns’ with which the fund management world to engage. Other evidence of such a claim is further supported by looking at BNY Mellon (one of the world’s largest custodians and third-party administrators) whose home page of its website has a link: “Tokenisation: Opening Illiquid Assets to Investors”.