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Market Neutral Strategy Fund

The aim of the MHC Market Neutral Fund is to secure outsized, market neutral returns from a diversified portfolio of investments which take advantage of pricing anomalies occurring in the cryptocurrency markets. As with all new markets which are dominated by retail investors, pricing inefficiencies appear which can be exploited by those able to use derivatives transactions and protocol analysis to produce outsized risk adjusted returns without taking directional exposure to the market as a whole. Initially set up as a proprietary trading desk to invest our own money, we are now inviting a limited number of investors to put their money to work alongside us through the MHC Digital Market Neutral Fund. Though the returns will not match those in a crypto bull market, we believe we can extract excess returns of at least 15% no matter how the crypto market performs.

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To achieve this, we are focused on two buckets of investments:

Derivatives Arbitrage
With retail investors willing to pay more to get leverage in this new market, futures and options have become mispriced. Using a combination of cash positions and derivatives, we believe we can capture the mispricing without taking exposure to the overall market. These opportunities will persist until large balance sheet players commit capital to this opportunity and invest the opportunity away. Until that time, we aim to make outsized returns from this strategy.

Protocol Staking
Through a deep analysis of blockchain protocols, we believe we can extract outsized returns from providing liquidity to technology-based market makers of stable coins. The key to success here is understanding the technology behind the protocols and the breadth of the community using them. The returns on these investments provide an outstanding risk-return and are not affected by directional moves in the market. When staking, we use bots to liquidate yields automatically when paid to insulate ourselves from market moves. As a proprietary trading desk, we aim to identify pricing anomalies which may appear in many shapes and forms and put money to work to monetise those inefficiencies. We will not, however, take directional views on the market and will not use leverage.

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