Meet The Eiffel Team
Head of Portfolio Management
“to protect the privacy of our team, we will be using nicknames throughout interviews after the first article of this series. This is done precisely because some of our team members have other professional commitments and/or hold public office that preclude them from pursuing certain work or interest outside their capacities.”
Formation Fi brings together a fresh and optimistic view for investing whilst also incorporating classic investment techniques and intelligence. And this is particularly true in the expertise brought to the team by Swissy, our Head of Portfolio Management.
As they tell us:
“My background is investment and risk taking, I’m an investment professional. I think I’ve basically traded everything you can trade. I was a market maker in the equity and fixed income derivatives space. In the hedge fund area, I traded derivatives and commodities in a systematic way. I was a hedge fund of funds manager and managed multi billion portfolios for institutional clients.”
Hedge fund techniques brought into a crypto space
This significant investment experience comes after having studied at a number of eminent academic institutions. Swissy initially studied at the University of Zurich, studying economics. And has since gone on to gain a number of additional, professional qualifications including becoming a registered CFA (Chartered Financial Analyst), CAIA (Chartered Alternative Investment Analyst) and CMT (Chartered Market Technician).
This huge range of experience meant that they were a natural candidate to bring the hedge fund ethos into the work of Formation Fi and the crypto investment world. Swissy first became interested in investing in crypto at the end of 2014, a time when it was just beginning to become prevalent on the Swiss market. At this point they were largely trading for themselves so moving into crypto felt like a natural move, in order to better understand the market and gain exposure to the crypto sphere and market.
As they explain:
“I made small investments myself in the crypto market- to get exposure to it. And then when Chris and Josh got in contact with me, I realised that this was really the point where I had to move into this market full speed. Because for me the attractive part is the way we manage the money or the exposure in our fund. I knew the investment philosophy, so the challenge was to bring this traditional finance way of investing into a DEFI way of investing.”
Unique smart contracts
Swissy then brought their skillset into Formation Fi’s method of investing and of building risk parity as a key part of the investment process. These investment strategies contributed to developing the smart contracts that sets Formation Fi apart. These contracts work by allowing re-balancing, monitoring and client investing on a more regular basis. In fact portfolios can be reviewed and re-balanced on a daily, or even more frequently, basis.
Swissy detail the process to us:
“I knew things like performance fee calculation, high water mark calculation. We had to bring this into the smart contracts and this is the unique thing we are doing, we are taking the logic of a hedge fund into a smart contract. And what they might have done on a quarterly basis we are able to do more frequently. We can do re-balancing on a daily basis, and going forward we can do it even more frequently. To do this automatically is a big advantage and the limit is only the gas fees.“
Risk parity means that an investor has the chance to have a diversified exposure in the crypto market. Yet all of this is personalised in one transaction, meaning investors can choose how much risk or return they want to take. Then based on this, the system builds a portfolio, taking into account the 3 underlying portfolios (alpha, beta and gamma).
Swissy believes that this structure makes Formation Fi a unique prospect in the crypto market. The level of diversified exposure that these portfolios bring will mean that there is a better risk/return distribution. The crypto space is constantly evolving, which means that there are great opportunities for success but also risks for failures. As Swissy mentions:
“Really in the end this crypto market- and the DEFI market, the web 3- there will be big winners but also a lot of losers and our job is to have a system where we realize early when we are invested in losers, but because we have so much diversified exposure, investing in losers is not so much of a risk. So the tricky part is to figure out which coins, which projects will be the losers and react accordingly. “
Bringing the bright future to local communities
Swissy also sees the potential that crypto has for communities, beyond the online world. They are an active part of their local community where they grew up, working in social outreach and local, community politics in their home town, in their spare time. They see this as connected to their investment work, seeing that crypto in the long run has the power to bring beneficial investment into local communities.
As Swissy finally conclude:
“In Switzerland you can do this community politics next to your normal business, so i am mayor of a small town, of 8,000 people. So I want to bring my home town into the bright future.”
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