Crypto hedge fund Pythagoras Investment Management has teamed up with MainNet Capital to launch a directional trading bitcoin CTA fund from Singapore. MainNet initially seeded the fund, which aims to enhance returns from bitcoin. The new fund started trading on Friday, run by Rubing Duan, the CTO of Pythagoras Investment and now a PM at MainNet. The long-biased MainNet Pythagoras Alternative Asset (MPAA) fund trades CME-listed futures contracts taking long positions in bitcoin futures and hedging with shorts. It is the second hedge fund structured as a Singapore VCC from the MainNet spearheaded by founder and chairman Elon Huang. MPAA achieves absolute return regardless of market conditions through short-term trading in order to manage risk, according to Huang. Through CME futures, the fund gains directional exposure to the price of bitcoin but on reduced downside volatility, he added. The strategy produces better risk-adjusted returns than just buying bitcoin spot or holding the asset. “The primary strategy is trend following, both long and short, using conventional momentum trading techniques that have worked in managed futures and traditional markets but this time applied to the CME Bitcoin Futures,” the firm said. To diversify and reduce risk, the fund can also invest in ETH futures contracts which now trade at the CME since early this year. Besides starting a financial technology start-up, he has been engaged in research and development work on big data and quantitative financial technologies in the last 12 years and has written more than 40 papers published in international journals and conferences and also holds more than four patents on new inventions. Huang, the founder of MainNet, previously established his career in wealth management in Singapore local banks prior to establishing his own vehicle four years ago. Huang said the fund offers a transparent and fully regulated product since it only trades futures contracts instead of the crypto asset itself. A three-year backtest of the algo-driven strategy from 2018 to March 2021 suggested a staggering 2,818% gain versus only 346% for bitcoin in the same period, according to Huang. MainNet began as a venture capital outfit but created an umbrella vehicle for its internally-seeded hedge funds under Singapore’s VCC regime. The group early this year launched a macro volatility fund also under Singapore’s VCC regime. Its Mountview Futures Fund, a volatility risk premium fund, started with around $2m and has grown to around $20m most recently. The fund has delivered a net return of around 1% every month since March. The strategy focuses on the volatility of options and leverages the regression of volatility to build an options portfolio to go long or short, which provides a relatively stable return. The fund’s macro overlay identifies the imbalance and mismatch of financial asset prices. Jet Li, the portfolio manager, previously worked at several Wall Street firms, running billion-dollar portfolios prior to joining MainNet.