Sep 30: Professional investors are increasingly turning to centrally risk-managed multi-manager pod style digital asset platforms, new global research from London-based Nickel Digital Asset Management, Europe’s leading digital assets hedge fund manager founded by alumni of Bankers Trust, Goldman Sachs and JPMorgan, shows.
Research with more than 200 senior executives at institutional investors and wealth managers found 80% believe so-called shops are more attractive than investing with single-manager digital asset hedge funds, including 23% who say pod shops are “much more” attractive.
The survey across the US, UK, UAE, Germany, Switzerland, France, Italy, the Netherlands, Singapore, Brazil and the Nordics found respondents expect to increase allocations to multi manager strategies - 86% plan to increase allocations over the next 12 to 24 months.
The key to expansion however is 24/7 risk monitoring - 82% questioned say it is essential or very important to their comfort with digital asset hedge fund strategies compared with traditional hedge funds.
Nickel itself runs a trading bench with around 85 pods across 42 cities and six continents which is focused on reducing fixed-cost drag and strengthening alignment and trust with pods anchored in higher performance fees, but with a holdback to absorb some degree of potential future drawdowns.
Its study found nearly two out of five (38%) institutional investors and wealth managers are already invested in pod-style platforms for digital asset hedge fund strategies, while a further 50% are familiar with the strategy but not yet invested.
Nearly a third (32%) questioned said diversification of their alternatives portfolio is the main role a pod-style platform would play in their broader portfolio, while 27% said it would provide a lower volatility entry into the digital asset sector.
The ability of pod shops to provide dynamic capital allocation across managers and strategies was selected as the most important feature when selecting a platform by 21%, while the same number pointed to the quality and breadth of portfolio management talent. Around a fifth (18%) highlighted centralised real-time risk controls as their most defining feature.
Automated drawdown and leverage limits at pod level are regarded as the most important risk controls by 25% while 23% believed ring-fencing of capital and margins by pods is most important. Around 22% would value independent exchange and counterparty exposure limits as the most important.
The ability of pod shops to follow trends and systematic momentum is seen as the most attractive source of alpha by 38% of survey respondents when asked to select their top three. That was marginally ahead of 37% identifying basis, funding-rate and carry strategies and the same number pointing to statistical arbitrage or quantitative strategies. Around 36% highlighted volatility and options trading.
Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, said:
“Multi manager pod shops offer a combination of flexibility for traders and discipline for investors and that is proving increasingly attractive in the digital asset space as the research shows.
“Independent pods can act swiftly while central risk monitoring ensures that global risk controls are uniformly applied, bridging the gap between low-latency crypto trading and institutional safety. The combination of institutional rigour and digital agility enables managers to deliver superior risk-adjusted returns.”
