Hedge Fund Volatility Vets Launch Crypto Fund

  • The startup is led by experienced traders in the volatility markets
  • Flagship fund launched in January is growing slightly every month, even as crypto markets have been disrupted

A quantitative crypto hedge fund startup led by a longtime hedge fund professional is raising its second vehicle thanks to continued demand from institutional investors.

Ian Tousignant’s Outremont Technologies began trading his second fund last month as fundraising continues for his latest venture, as well as the company’s startup vehicle, according to two people with knowledge of the matter.

Its latest offering executes a so-called smart beta strategy, with limited partners betting that they will make money in tandem with the market – if bitcoin doubles, their holdings will double.

The startup’s flagship vehicle, which launched in January, uses an automated quantitative strategy that relies on volatility trading, in line with the track record of Tousignant and his traders to make money from spikes and at market lows.

The sources were granted anonymity to discuss sensitive business transactions. Tousignant declined to comment.

The company favors a liquid strategy focused on the top 30 coins by market capitalization that does not take on delta risk, nor does it take a directional view of price movements between a derivative and its underlying asset. That said, Tousignant maintains models that allow the firm to trade “everything under the sun,” including futures and other options.

Last month, Outremont had about $40 million in assets under management. Its team of around 12 suggests it expects significant inflows. Staff members are based around the world, including Montreal, New York, and Amsterdam — a setup that allows the startup more flexibility to generate alpha from crypto markets that aren’t dormant.

Indeed, a source said the company is in the process of closing some “larger tickets” that are expected to arrive later this quarter – if they haven’t already.

Tousignant touted his resume — including stints as a portfolio manager at Millennium Management and Hutchin Hill Capital — as deep-pocketed investors seek to back and forth crypto outfits that have traditional experience in financial markets. His team is also working on machine learning signals.

The firm runs approximately 12 strategies, including volatility arbitrage, cross-platform arbitrage, and decentralized finance (DeFi) volatility arbitrage. Unlike a fully quantitative and automated black box strategy, its traders pull the trigger on every trade.

The beta fund adjusts its market exposures based on the market, executing lower net exposures during market declines. Its flagship fund, meanwhile, posted a gross return of 30 basis points in January and 60 basis points in February as volatility – later intensified by the Russian invasion of Ukraine – rattled equity markets. digital assets and led to heavy losses in a number of major funds.

It imposes a $1 million minimum on sponsor checks that can be split between the two funds. There is no lock-up and quarterly redemptions are permitted with 60 days notice under a 25% quarterly threshold.

The alpha fund’s capacity is pegged at around $250 million, with a source saying Tousignant is making a “calculated bet that [the firm] will grow with market capacity.

It’s worth bearing in mind, the source added, that a year ago traders couldn’t dabble much in crypto volatility or even options on digital assets.

Other senior members of the team include Darryl Zerdy, a managing director who previously worked for Hutchin Hill and Peace Bridge Partners. Another managing director, Anoop Dalvi, last headed the equity derivatives desk at Goldman Sachs.

Outremont chief operating officer Sharon Liu previously worked for a fixed-income hedge fund, and Selim Adyel, a quantitative strategist, previously worked for Caxton Associates and Morgan Stanley. Fellow quantitative strategist, Vladyslav Ivanov, spent time in Chicago’s proprietary quantitative trading scene.

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  • Michael Bodley

    Chief Editor

    Michael Bodley is a New York-based editor for Blockworks, where he focuses on the intersection of Wall Street and digital assets. He previously worked for the institutional investor newsletter Hedge Fund Alert. His work has appeared in The Boston Globe, NBC News, The San Francisco Chronicle and The Washington Post. Contact Michael by email at [email protected]
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