Patrick Tan is the CEO & Basic Counsel of Novum Alpha, a quantitative digital asset buying and selling agency that has launched one in all Singapore’s first fully-licensed and controlled digital asset hedge funds, the Novum Alpha World Alternative Digital Asset Fund, managed underneath a Capital Markets Providers license held by PIVOT Fintech.
Regulated by the Financial Authority of Singapore, Patrick is an Authorised Consultant and serves as a Portfolio Supervisor with PIVOT Fintech. Appointed as an Advocate & Solicitor in 2005, Patrick specialises in blockchain know-how legislation and was beforehand working towards with one in all Singapore’s prime blockchain know-how legislation companies. He was additionally a pilot with Singapore Airways the place he flew the state-of-the-art Airbus A350.
Patrick now oversees buying and selling groups in the UK and Singapore, analysing and managing dangers associated to cryptocurrency buying and selling for Novum Alpha, is a sought-after speaker at main fintech occasions and has his writing usually featured in main publications.
To search out out extra about his intriguing work, and the way his expertise as a pilot and a lawyer has formed his present profession path, we caught up with Patrick for a fast chat. Learn on to search out out extra.
What’s the Novum Alpha World Alternative Digital Asset Fund?
The Novum Alpha World Alternative Digital Asset Fund is a regulated cryptocurrency hedge fund that’s registered with the Financial Authority of Singapore and managed by a Capital Markets Providers Licensed Funding Supervisor. The Fund represents the end result of virtually a decade of expertise buying and selling and investing in cryptocurrencies and is a long-short quantitative-discretionary fund.
What’s a Lengthy-Brief Fund?
Lengthy-short implies that the Fund can take each lengthy (bullish) positions in addition to brief (bearish) positions and we are able to take these positions concurrently.
Though the Fund is long-biased, as we consider that the digital asset markets are nonetheless of their infancy, we additionally take brief positions the place we’re of the view that particular digital belongings have both turn out to be overvalued, or lack the technological or improvement help to justify their present value.
Quantitative merely implies that we use mathematical fashions to information our automated buying and selling algorithms to execute our funding methods within the digital asset markets.
As a result of the digital asset markets by no means sleep, the majority of all buying and selling must be performed mechanically, and that is achieved utilizing buying and selling bots (laptop applications) which can be preset to enter and exit trades in keeping with parameters developed from our proprietary issue fashions.
However provided that the digital asset markets are extraordinarily dynamic, it’s essential to additionally cater for human intervention once in a while, for example once we turn out to be conscious of sure macro or regulatory shifts, we should have the pliability to intervene in our buying and selling applications to both capitalize on informational inefficiencies or value dislocations.
The digital asset markets are additionally extremely vulnerable to manipulation and provided that they’re nonetheless comparatively inefficient, a discretionary overlay of our automated buying and selling applications offers us with the pliability to grab on such alternatives.
Why launch the Fund now?
We’ve been buying and selling cryptocurrencies utilizing our personal capital for nearly a decade and been offering managed accounts for nearly 5 years now.
In 2018, we needed to launch a digital asset hedge fund, as we foresaw that regulation would finally come to this area, however service suppliers on the time, particularly for custodial providers, had not but caught up with the speedy improvement of the market and couldn’t present us with what we would have liked to correctly execute our buying and selling methods.
As an alternative, we supplied purchasers managed account providers, which allowed us to make use of APIs (Utility Programming Interfaces) to remotely commerce out of their accounts held with digital asset exchanges. Quick ahead to 2021 and the panorama has vastly modified dramatically for digital belongings.
Regulation is quick coming and, in some jurisdictions, has already arrived. Buyers are additionally extra savvy, and cryptocurrencies are not an alien idea to them, which is why the time is true to construction our providing to cater to institutional and accredited buyers.
Moreover, service suppliers have moved forward in leaps and bounds and are actually in a position to cater for our buying and selling methods in ways in which simply weren’t potential in 2018.
What different merchandise is Novum Alpha launching?
The Novum Alpha World Alternative Digital Asset Fund is barely our first providing and is long-biased, which can present extra aggressive returns for buyers, albeit with barely extra volatility, however is right as a flagship fund in a rising sector.
We even have extra conservative buying and selling methods and can be launching a market-neutral fund within the first quarter of 2022 as our purchasers have requested us to take action.
This second fund will search to revenue from the volatility and inefficiency inherent within the digital asset markets however as a result of it’s market-neutral, returns are anticipated to be extra average as nicely.
On prime of the second fund, we’re within the remaining levels of launching a listed Alternate Traded Product or ETP which can commerce within the prime digital belongings on the SIX Swiss Alternate, along with our three way partnership companion, Alset Restricted, a conglomerate with pursuits in a number of companies listed on the Singapore inventory change.
The SIX Swiss Alternate is without doubt one of the largest inventory exchanges in Europe and has a longtime, vibrant and deep digital asset ETP buying and selling market. We selected to work with SIX due to its entry to European markets, superb location which straddles all three main time zones, together with New York, London and Hong Kong and familiarity with digital belongings.
What makes you completely different from different cryptocurrency hedge funds?
To be trustworthy, given the present state of the digital asset markets right now, there’s nonetheless loads of upside potential no matter which fund you go along with, or which technique you choose. The distinction with Novum Alpha, as our buyers can attest, is that we give attention to three issues, transparency, schooling and relationship.
If you make investments with Novum Alpha, we wish you to grasp so far as potential what it’s that we do. The irony is although the blockchain was constructed on the ideology of transparency, hedge funds are usually not, and we consider that that mindset wants to alter.
When a shopper invests with us, we wish them to understand how we method our digital asset investments, and develop with us, which is why we focus a lot on schooling. Legendary billionaire investor Warren Buffett as soon as mentioned, “put money into what ” and with regards to digital belongings, we try to make sure our buyers know as a lot as potential.
We consider that an funding shouldn’t simply be rewarding financially, however intellectually as nicely, and that’s why we put a lot emphasis on investor schooling and conduct common seminars and create content material not only for our purchasers, however for the group as nicely, as a option to give again.
Lastly, if you make investments with Novum Alpha, you’re investing with household. We’ve created an investor relationship program generally known as “The Novum Desk” as a result of if you sit on the desk with us, we care in your funding the way in which you’ll in your family’s future and fortune.
The Novum Desk offers buyers with unparalleled entry to our schedule of occasions (pandemic restrictions allowing), from non-public eating, unique events, and motorsports, to private talks with trade insiders, thought leaders and specialists.
Our thoughtfully curated investor relationship program offers buyers not simply a possibility to fulfill portfolio managers, attend occasions and glean insights from trade insiders, but additionally to fulfill, know and perceive the group of associates and fellow buyers that make up The Novum Desk.
What position does the Fund play in an funding portfolio?
The Fund is finally a dollar-denominated funding automobile and subsequently caters to buyers who want to develop their present portfolios by publicity to the digital asset class. With declining yields, rising inflation and lofty fairness valuations, the Fund offers buyers with a possibility to achieve from the expansion of digital belongings.
That having been mentioned, an funding within the Fund is essentially extra dangerous than an equal allocation in authorities bonds and constitutes the expansion portion of an investor’s total portfolio. However with low correlation to different funding devices, publicity to digital belongings might help create a extra diversified portfolio, with the advantages that gives.
You had been a lawyer in addition to a pilot, how has that helped you because the CEO of a cryptocurrency hedge fund?
Steve Jobs as soon as famously mentioned that “the dots join backwards” and in my private expertise that’s been completely true.
I do extra studying ever since I entered the digital asset area nearly a decade in the past, than I did in all my years of legislation faculty. Apparently, each legislation and flying might be lowered to algorithms. Algorithms are basically the collection of dI do extra studying in a month coping with digital belongings than I did in all my years of legislation faculty. Apparently, each legislation and flying might be lowered to algorithms. Algorithms are basically the collection of choices we make that instruct our selections – we do it on a regular basis and daily.
The thought course of that determines what we select to eat for lunch is an instance of a easy algorithm, a collection of “sure” and/or “no” kind directions that produces an end result. Flying and the follow of legislation are intimately intertwined with the structuring of fine algorithms.
Whether or not it’s flying 300 passengers safely to their vacation spot, or negotiating a contract for a shopper, an excellent pilot or lawyer must go enter a collection of directions based mostly on a algorithm to derive a desired end result. The identical goes for buying and selling as nicely.
Algorithms assist to construction the way in which we execute our views on the digital asset markets and it’s a strategy of absorbing information, responding to that information, and committing to fixed enchancment.
Regulation and flying, identical to the digital asset markets, are extremely dynamic environments.
Flying climate can change straight away and a witness in courtroom can inexplicably flip hostile – the identical goes for the digital asset markets, the place a lot might be swung by seemingly so little. We cater for these externalities and exigencies by ensuring that we and our algorithms are sufficiently nimble to reply to the fluid working setting.
The place do you see the cryptocurrency area headed subsequent?
Having been concerned with digital belongings for nearly a decade now, I can safely say the trade has achieved exit velocity. The extent of institutional curiosity within the digital asset sector that I’ve seen up to now eighteen months has exceeded something that I’ve witnessed earlier than at any time over the previous decade.
Regulators are additionally taking a extra severe take a look at digital belongings and recognising the necessity to create a secure and sure setting to encourage larger participation and adoption, and that’s an excellent factor. Final month El Salvador was the primary nation on the earth to make bitcoin authorized tender, a transfer that would embolden different nations, particularly those who rely closely on remittances, to do the identical.
I believe we’re at a turning level with regards to cryptocurrencies and extra individuals are turning into conscious and alive to their transformative and funding potential.
What are your plans for Novum Alpha?
Novum Alpha is the asset administration arm of the Novum Group, a vertically built-in group of blockchain and cryptocurrency firms. The Novum Group is actively concerned in sensible contract and blockchain software program improvement, usually organises trade occasions, and produces and distributes buying and selling purposes and options.
I consider that buyers with Novum Alpha have the additional advantage of having access to the collective knowledge and energy of the Novum Group, which offers distinctive insights that assist inform our buying and selling methods and funding theses.
We’re presently growing a plethora of latest and thrilling regulated digital asset funding merchandise that we consider will place us for additional progress as we proceed to contribute to the group that has supplied us with an abundance of alternatives. I would really like for Novum Alpha to proceed enhancing the worth we ship to our buyers, companions and stakeholders, as we contribute to the expansion of the digital asset trade.