Fund update: R-co Thematic Blockchain Global Equity — September 2024

16 trillion

In August, global financial markets experienced significant volatility, intensified by substantial unwinding of the Yen carry trade and weakening US labor data, which heightened concerns about an imminent economic recession. Yet, investment flows into digital assets products have been holding well, ending the month with US$58m net inflows². At the end of August, YTD net inflows into this asset class stabilized at a bit more than US$22.4bn².

In this context, fund overall retraced in August, led by Blockchain Infrastructure and Digital Assets / Fintech categories, which outperformed YTD, while Industrial applications / Audit trail, Web3 / Metaverse and Transportation / Logistics buckets all posted positive performance over the month. Earnings season almost completed, providing positive updates of corporate fundamentals: 77% of portfolio companies that published posted positive results, 15% were in line with consensus expectations and 8% below².

Our private portfolio company, Circle, a leading issuer of the US dollar-backed stablecoin USDC, has reached a milestone this month with an all-time transaction volume surpassing US$16 trillion¹. Over the recent months, Circle has significantly strengthened its market presence through strategic product expansions, including the product ramp up of EURC, a Euro-denominated and first MiCA compliant stablecoin, and the introduction of innovative remittance features. These enhancements have facilitated substantially cheaper and faster cross-border payment solutions. Additionally, Circle is actively engaged in preparatory activities in anticipation of its upcoming Initial Public Offering.

We took advantage of market weaknesses at the beginning of the month to introduce a new company to the portfolio: Defi Technologies, a Canadian financial services provider bridging traditional finance with innovative exposure to digital assets. We also marginally strengthened our holdings in Coinbase, Snowflake, SES AI and Canaan. We took some profits on best performing companies like Mastercard, Meta, Composecure and PayPal. At the end of the month, equity exposure was 98.9%³.

Industry news to watch 

Announcements made this month by established companies of blockchain-based innovations continued to pertain to various sectors of the economy and enterprise use-cases. Among many others:

Sony launches the Soneium protocol to better bridge Web 2.0 with Web 3.0.

The Asian Infrastructure Investment Bank (AIIB) issues $300m digital bond using Euroclear infrastructure.

The Osaka Digital Exchange (ODX) Japanese digital securities exchange announces listing tokenized bonds soon. ODX is namely backed by Daiwa Securities, Nomura, SMBC and the CBOE.