The fund

Circle Fund is a Common Account Fund (FGR) under Dutch law.

The fund assets are placed in a separate foundation, the Circle Fund Legal Property Foundation, which is managed by IQ EQ Custody B.V. to ensure correct segregation and protection of participants' invested funds.

IQ EQ Custody B.V. is supervised by De Nederlandsche Bank.

We invest participants' funds exclusively in currencies (Spot FX) and gold (Spot/Futures Gold) using algorithms and arbitrage models developed in-house. The Circle Fund strategy can be divided into two main strategies, namely a mean reversion strategy and a swap arbitrage strategy.

We do not invest in crypto currencies.

Mean reversion

A mean reversion strategy is an investment strategy based on the assumption that asset prices, in our case currency, tend to return to an average value or “mean” over time. This means that if a currency pair trades significantly above or below its average price, it is likely to correct towards that average.

Calculating the Mean: The strategy starts by determining the historical average of the currency pair to which the strategy is being applied. This is calculated using various methods, such as simple average, exponential weighted average, or other statistical techniques.

Identification of anomalies: The strategy constantly monitors the current rate of the currency pair and compares it with the historical average. If the price deviates significantly from the average, it is assumed that there is a chance of a return to the average.

Trading Decisions: When the price reaches a certain deviation, the strategy can make trading decisions. For example, if the price is too far below average, the strategy may place a buy order, expecting the price to rise and converge towards the average. Conversely, if the price is too far above the average, the strategy can place a sell order, anticipating a fall in the price.

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Swap arbitrage

Swap arbitrage is a trading strategy that revolves around taking advantage of price differences or dislocations in swap costs between different brokers, both institutional and retail.

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Swap costs, also known as rollover costs, are costs associated with holding a currency position overnight. These costs can be either positive (to your advantage) or negative (to your disadvantage) and depend on the interest rate difference between the two currencies in a currency pair.

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The idea is to take a position with one broker where you receive a positive swap, while taking an opposite position with another broker where you pay less swap. This allows you to generate income from the swap costs without market risk as the position is 100% hedged.

The mean reversion trading strategy has a below-average market risk and is applied to approximately 30% of the Circle Fund's invested assets.

This swap arbitrage strategy is market neutral and is applied to approximately 70% of the Circle Fund's invested assets.