Patrick Tan is the CEO & Basic Counsel of Novum Alpha, a quantitative digital asset buying and selling agency that has launched considered one of Singapore’s first fully-licensed and controlled digital asset hedge funds, the Novum Alpha World Alternative Digital Asset Fund, managed beneath a Capital Markets Companies 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 regulation and was beforehand working towards with considered one of Singapore’s prime blockchain know-how regulation 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 commonly 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 means of a Capital Markets Companies Licensed Funding Supervisor. The Fund represents the fruits 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 signifies that the Fund can take each lengthy (bullish) positions in addition to brief (bearish) positions and we will 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 into overvalued, or lack the technological or growth help to justify their present value.
Quantitative merely signifies 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 finished mechanically, and that is achieved utilizing buying and selling bots (laptop applications) which might be preset to enter and exit trades in line 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 every now and then, as an illustration after we turn into conscious of sure macro or regulatory shifts, we will need to 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 supplies 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 wished to launch a digital asset hedge fund, as we foresaw that regulation would finally come to this house, however service suppliers on the time, particularly for custodial companies, had not but caught up with the speedy growth of the market and couldn’t present us with what we would have liked to correctly execute our buying and selling methods.
As a substitute, we supplied purchasers managed account companies, which allowed us to make use of APIs (Software 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. Traders are additionally extra savvy, and cryptocurrencies are not an alien idea to them, which is why the time is correct 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 simply 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 reasonable as properly.
On prime of the second fund, we’re within the closing 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 accomplice, Alset Restricted, a conglomerate with pursuits in a number of companies listed on the Singapore inventory alternate.
The SIX Swiss Alternate is among 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, very best 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 immediately, there may be nonetheless loads of upside potential no matter which fund you go together 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.
While you make investments with Novum Alpha, we would like you to grasp so far as potential what it’s that we do. The irony is though 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 consumer invests with us, we would like 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 stated, “spend money on what you recognize” and on the subject of 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 properly, 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 neighborhood as properly, as a method to give again.
Lastly, while you make investments with Novum Alpha, you’re investing with household. We’ve created an investor relationship program often known as “The Novum Desk” as a result of while you sit on the desk with us, we care on your funding the way in which you’d on your family’s future and fortune.
The Novum Desk supplies buyers with unparalleled entry to our schedule of occasions (pandemic restrictions allowing), from non-public eating, unique events, and motorsports, to non-public talks with trade insiders, thought leaders and specialists.
Our thoughtfully curated investor relationship program supplies buyers not simply a possibility to satisfy portfolio managers, attend occasions and glean insights from trade insiders, but in addition to satisfy, know and perceive the neighborhood of mates and fellow buyers that make up The Novum Desk.
What function does the Fund play in an funding portfolio?
The Fund is finally a dollar-denominated funding car and due to this fact caters to buyers who need to develop their present portfolios by means of publicity to the digital asset class. With declining yields, rising inflation and lofty fairness valuations, the Fund supplies buyers with a possibility to achieve from the expansion of digital belongings.
That having been stated, 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 will help create a extra diversified portfolio, with the advantages that gives.
You have 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 stated 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 house virtually a decade in the past, than I did in all my years of regulation college. Apparently, each regulation and flying may be diminished to algorithms. Algorithms are primarily the sequence of dI do extra studying in a month coping with digital belongings than I did in all my years of regulation college. Apparently, each regulation and flying may be diminished to algorithms. Algorithms are primarily the sequence of choices we make that instruct our decisions – we do it on a regular basis and on daily basis.
The thought course of that determines what we select to eat for lunch is an instance of a easy algorithm, a sequence of “sure” and/or “no” sort directions that produces an final result. Flying and the apply of regulation are intimately intertwined with the structuring of excellent algorithms.
Whether or not it’s flying 300 passengers safely to their vacation spot, or negotiating a contract for a consumer, an excellent pilot or lawyer must go enter a sequence of directions based mostly on a algorithm to derive a desired final result. The identical goes for buying and selling as properly.
Algorithms assist to construction the way in which we execute our views on the digital asset markets and it’s a strategy of absorbing knowledge, responding to that knowledge, and committing to fixed enchancment.
Legislation 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 may 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 atmosphere.
The place do you see the cryptocurrency house 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 critical take a look at digital belongings and recognising the necessity to create a secure and sure atmosphere to encourage better participation and adoption, and that’s an excellent factor. Final month El Salvador was the first country in the world to make bitcoin legal tender, a transfer that might embolden different nations, particularly those who rely closely on remittances, to do the identical.
I feel we’re at a turning level on the subject of cryptocurrencies and extra individuals are changing 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 growth, commonly 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 power of the Novum Group, which supplies distinctive insights that assist inform our buying and selling methods and funding theses.
We’re presently creating a plethora of recent and thrilling regulated digital asset funding merchandise that we consider will place us for additional progress as we proceed to contribute to the neighborhood that has offered us with an abundance of alternatives. I would love 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.