Strategy Spotlight

Why a market neutral digital asset fund of funds

A look at a fund of funds focused on alpha-oriented, market neutral digital asset managers — what it seeks to achieve, how it is built and why professional investors consider a lower-beta approach. For information only; not an offer or solicitation.

2 July 20268 min read

Key takeaways

This type of fund of funds focuses on specialist managers pursuing market neutral and relative-value strategies, seeking returns less dependent on broad market direction.
The aim is a differentiated, lower-beta return profile within the digital asset ecosystem — though 'market neutral' never means risk-free.
It is built through alpha-focused manager selection, market neutral and relative-value diversification and disciplined exposure control.
Professional investors consider it for diversification, reduced directional dependency and access to skill-based managers.
Block Asset Management manages this type of strategy with structured due diligence focused on the durability of each manager's edge and embedded risk discipline.

What this strategy is

A market neutral digital asset fund of funds allocates to specialist managers whose returns are intended to come primarily from skill and relative value rather than from the overall direction of digital asset markets. It emphasises market neutral and relative-value approaches that seek to limit dependence on broad market beta.

As with any fund of funds, the underlying managers are not named publicly. The focus here is the rationale for a lower-beta, alpha-oriented structure — one designed to participate in the digital asset ecosystem while seeking a return profile less tied to whether the market rises or falls.

How it is built

The structure combines alpha-focused selection with diversification across complementary market neutral approaches.

Alpha-focused selection — manager selection prioritises demonstrable, repeatable sources of return over directional market beta.
Market neutral and relative value — the portfolio combines complementary market neutral and relative-value strategies that seek to limit directional dependence.
Manager due diligence — candidates are assessed on the clarity and durability of their edge, risk controls, infrastructure and operational robustness.
Exposure discipline — allocations are governed by concentration and correlation limits, with continuous oversight of net and gross exposures at portfolio level.

Why professional investors consider it

The points below are general reasons an investor might find a lower-beta digital asset structure useful. They are observations, not a recommendation.

Differentiated return drivers — returns sought from skill and relative value rather than market direction.
Reduced beta dependency — a return profile that aims to be less correlated to broad market moves, though correlation is never guaranteed.
Diversification within a digital asset allocation — a complement to directional exposure rather than more of the same.
Access to skill-based managers — specialists whose approaches are difficult to source and evaluate individually.

Risk considerations

Market neutral does not mean risk-free. Reducing directional exposure removes one risk but emphasises others.

Market neutral strategies can still incur losses, including during periods of market stress.
Digital assets are highly volatile and may affect underlying strategies even where directional exposure is limited.
Underlying managers may use leverage, and hedges may not fully offset directional exposure.
The strategy may not achieve its objective; investors may lose part or all of their capital. Past performance is not a reliable indicator of future results.

Who it is designed for

This type of structure is intended for professional and qualified investors seeking risk-adjusted, lower-beta digital asset exposure — for example institutional allocators, family offices and wealth managers diversifying an existing allocation.

Any investment can only be made by eligible investors on the basis of the relevant offering documentation. This note is educational and does not constitute an offer or solicitation.

Block Asset Management

How Block Asset Management manages this strategy

This is one of the strategies we manage for professional and qualified investors. Its advantage lies in disciplined selection of skill-based managers and rigorous control of exposure — the difference between seeking alpha and simply owning the market.

Alpha-focused manager selection

We prioritise managers with demonstrable, repeatable sources of return, assessing the clarity and durability of each manager's edge through structured due diligence.

Focus on hedging and execution

Selection scrutinises exactly what determines market neutral outcomes — hedging discipline, execution quality, leverage control and operational robustness.

Diversification across managers

Combining complementary market neutral and relative-value managers reduces reliance on any single manager, model or relationship.

Exposure control and monitoring

Net and gross exposures, concentration and liquidity are governed by defined limits and monitored continuously at portfolio level.

Experience and transparency

Eight years focused on digital assets inform how we select and oversee market neutral managers, with the transparency and controlled, auditable access institutions expect.

A market neutral digital asset fund of funds offers a different shape of exposure — one that seeks return from skill and relative value rather than market direction. Its value depends on the quality of the managers selected and the discipline applied to risk, which is exactly where a specialist manager earns its place.

Professional and qualified investors who would like to understand this type of strategy in more detail can contact our investor relations team or register for access to our strategy materials. This note is provided for information only.

Important information

This material is provided for information purposes only and is intended for professional and qualified investors. It does not constitute investment advice, nor an offer, solicitation or invitation to subscribe for or invest in any fund or strategy. Market neutral does not mean risk-free. Product names are generic strategy descriptors; underlying fund names are not disclosed publicly. Any investment can only be made by eligible investors on the basis of the relevant offering documentation. Digital assets are volatile and involve significant risk, including the possible loss of the entire amount invested. Past performance is not a reliable indicator of future results.

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