Nickel Digital Arbitrage Fund outperforms S&P500 despite crypto crisis

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London-based Nickel Digital Asset Management (Nickel), a regulated crypto hedge fund manager, has outperformed the S&P500 since January 2020, despite the initial strong performance of equities during the Covid period.

The firm's Digital Asset Arbitrage Fund had returned 25.5% net of fees between 1 January, 2020, and 24 May, 2022, compared with 22.2% by the S&P 500 and 25.5% by the NASDAQ Composite over the same period. 

The corresponding figures for 2022 YTD are -0.6%, -17.3% and -28.0% respectively. Bitcoin has fallen by 37% this year and by -60% from ATH in Nov 2021.

The May crypto crisis has seen another bout of extreme volatility with the Terra Luna token losing 99.9% of its value and dragging other digital assets down. Even some stablecoins – which are meant to retain parity with mainstream assets – have ‘de-pegged’ on several occasions.

Investors relying on safer asset classes such as US High Yield, EU High Yield, 10-year US Treasuries have seen returns hammered too, with those assets down -10.8%, -8.4% and -9.8% YTD, respectively.

Nickel’s arbitrage strategy is designed to harness extreme volatility and protect capital while delivering uncorrelated long-term returns. Nickel’s Arbitrage Fund was up +15.3% in 2021, as compared to its own long-term guidance of 8-10% pa. The Fund’s best month was +4.08%, while its worst month was -0.32%, highlighting a skew towards positive performance.

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