Letter to shareholders, Q2 2019<br>

Letter to shareholders, Q2 2019

Dear investors,

Year 2019 started with awakening of crypto markets. Both price action on public exchanges and OTC buying pressure indicate beginning of a bullish market cycle. We don’t take anything for granted, but the probability of reversal is now much higher, with confidence of investors surely returning to crypto.

If it’s true that history often rhymes, most likely scenario for start of the next bull cycle is following: Bitcoin will lead the initial rally for another 5-12 months, followed by rally of blue chip altcoins, possibly with one or more strong market leaders gaining traction. That is why we remain allocated in Bitcoin for at least 30% of our portfolio. In any case, we still think in probabilities and hold diversified allocation to capture upside from many different scenarios.

With ever increasing institutional interest it is becoming clear that Bitcoin is being regarded as a new asset class. Ethereum, the second biggest crypto network with the most mature ecosystem of developers, applications and users, got another positive confirmation from SEC.

We believe other crypto assets will also increasingly become recognized as alternative investment vehicles as well as valuable digital store of value.

Our investors demand a long exposure to these crypto assets with goal to financially participate on upcoming revolution of blockchain based networks. That’s why we at Sigil created well researched and diversified portfolio, which covers the upside from all relevant investment theses for crypto ecosystem and blockchain industry while limiting the systemic downside risk.

Fund performance

From now we will publish performance of our portfolio on quarterly basis. Performance charts are generated by Crypkit, our very own crypto-asset accounting app.

From the inception of our fund (1st Oct 2018) until the end of Q1 2019, we have significantly beaten our internal benchmark – Bitcoin (+25.34%).
Because of ongoing bearish market however, we ended up in loss against EUR  (-19.66%).

During Q1 2019 our performance was outstanding in both BTC (+18.56%) and EUR (+28.94%). Here we would like to emphasize high volatility of crypto market. One quarter or even one year is not enough to decide whether the investment strategy is really better than the market, or if we are just lucky / unlucky.

We are asking our investors to be patient, stick to our recommended investment horizon (5 + years) and do not draw any conclusions from short term results (good or bad) because they can be misleading

Portfolio structure

We aim to capture the most of the upside of emerging crypto market. Our portfolio is standing firmly on four legs:

  1. Core (40-60%): most mature and liquid cryptocurrencies and other digital assets represent the bulk of our allocation. These cryptonetworks already demonstrated significant traction, market liquidity and developer activity with digital ecosystems and multiple projects already being built on top of them.

  2. Staked (10-20%): crypto-assets and protocol tokens that allow for staking – they offer additional utility for owner (staking interest fee) and thus increase the return on investment. These assets bear additional yield for securing or performing other valuable work within the network. Core and staked parts may be overlapping.

  3. Tail (10-20%): low cap, more experimental crypto-assets and security tokens, usually in earlier phases of maturity. These assets provide asymmetric risk:reward dynamics but are more volatile and less tested and battle hardened.

  4. Illiquid (10%):  the smallest portion of our portfolio consists of pre-launch ICOs and illiquid equity of blockchain related startups – we reserve our 10% illiquid slot to pick only the highest quality opportunities.

We are also holding cash (between 10-30% of NAV) and proportion of our cash reserve is heavily depending on market circumstances, meaning we can rebalance portfolio often.

Our aim throughout 2019 is to stabilize our Core portfolio, continue adjusting our Tail portfolio and finish testing of staking so we can fully deploy our Staked portfolio.

Illiquid part of our portfolio is currently on hold and will be only added later when we reach larger AUM (above EUR 10m), since SAFT investing requires larger stakes. However, a small part of our portfolio can get illiquid for a limited period of time in order to participate in lock-drops such as recent Edgeware lockdrop. Lockdrop is alternative way for decentralized projects to distribute their tokens to actors, who are willing to lock some of their crypto-assets (like ETH) for some period of time in order to show commitment.

Investment decision making

We divide screening of possible investments into three stages:

  • Quantitative filtering – based on our investment theses we use screening tools and our network within the crypto industry to spot interesting projects with growth dynamics, looking at market and fundamental data.

  • Deep dive – after we pick the most interesting projects for review, we perform thorough due diligence on project fundamentals, teams, ecosystem, token dynamics, development and addressable market.

  • Committee vote – If an investment passes through first two filters, it is finally discussed in our investment committee (consisting of three co-founders) where we decide whether to proceed and create a investment plan for the position. Every member of the investment committee has veto right over any investment proposal.
On benchmarking

I would like to address possible questions about our internal benchmark. There are many ways how to pick a benchmark for long crypto fund. We can either go for performance of passive index of TOP X crypto assets, the crypto market in general (using aggregators like CMC), or even compare our performance to SP 500 or other stock index.

All of the choices above have significant issues. TOP X crypto index is not reliable, because of the volatile nature and immaturity of crypto market. Positions of crypto assets tend to change quickly and such benchmark would need to be constantly rebalanced and recalculated, which would make it hard for us to work with the data.

Picking stock or other indices would be an interesting choice, however we are here to provide allocation to emerging crypto assets and not compete with traditional markets.

Thus, we chose Bitcoin (BTC) as benchmark, meaning we aim to overperform Bitcoin price with our portfolio. In the future we consider using something like 70% BTC and 30% ETH as a benchmark, since we increasingly believe Ethereum is becoming another widely used Store of Value, reference currency and benchmark in crypto ecosystem.


Crypto market is slowly recovering and crypto-assets are strengthening their position as a new emerging asset class. We remain bullish in mid to long term horizon and recommend careful and planned accumulation. We believe that having zero allocation to crypto at this point is significant risk of omission for most sophisticated investors.

Sigil fund strives to help sophisticated investors with allocating part of their capital in balanced portfolio of crypto assets as seamlessly as possible. Our portfolio aims to provide enough diversification to capture upside of different crypto theses and beat the Bitcoin benchmark.

Overall we are very happy with the positive twist in the crypto markets, overperforming of both BTC and EUR benchmark and are grateful for your ongoing confidence and trust in Sigil fund.

With best regards,
Fiskantes, CIO of Sigil PCC Limited

This content piece is performed by Sigil PCC Limited for information and entertainment purposes only and is not to be taken as an investment or financial advice. Sigil PCC Limited does hold positions in some of the aforementioned projects.

Take a snapshot