According to Bloomberg, Diversified Alpha, a fund that capitalizes on market pricing inefficiencies, reported a net return of 11% in the first quarter of the year. This information was revealed in an investor presentation. The fund's Chief Executive Officer, Nickel, typically guides investors to anticipate 15%-20% annual returns for the vehicle.
In March, an extraordinary combination of volatility, massive volumes, and high dispersion propelled Diversified Alpha's gains to 5%. However, Nickel emphasized in the presentation that such conditions are not sustainable. He warned that increased risk in the fund could result in larger-than-usual drawdowns.
David Fauchier, Diversified Alpha's manager, stated in the presentation, 'Unfortunately, this is not a new normal, we won't make 5% every month going forwards. Everything you could want in a quarter pretty much happened at some point during that quarter.'
Diversified Alpha is not the only crypto manager to report a strong quarter. Funds from Brevan Howard and Pantera Capital also experienced significant gains due to the bull market. However, Diversified Alpha's exceptional performance has prompted caution from Nickel.
Michael Hall, Nickel Digital's chief investment officer, said in an interview, 'We don't want to overstep expectations. We want to let them know that they can have negative months as well. That's just being honest and straightforward.'