Fund Update - October 2023

Highlighted updates from September-October

September Performance

September Returns (%): 13.51%

September Returns ($): $2,303,275.86

Total Fund Balance: $19,341,929.27

Distributed to Users: $4,860,928.27

Funds Generated: $13,272,628.82

Unique Users: TBA

Average Deposit Per User: TBA

Average Monthly Return (%): 16.15%

Months Active: 16

More EVM compatible chain options

The Gray Fund is now available on the following networks:

  • Binance Smart Chain

  • Ethereum Network

  • Polygon Network

  • Arbitrum Network (New)

  • Optimism Network (New)

  • Base Network (New)

  • Avalanche Network (New)

Comprehensive audit and KYC with CertiK completed

The Gray Market + Gray Fund have completely finished a comprehensive audit and KYC with CertiK. At the time of writing this our security score there is (84.92%), marking us at rank #260 of thousands. We expect the score to increase as they fix some of the backend data points related to our project (90%+). The CertiK audit helped us identify some key issues and resolve them. A comprehensive report from CertiK can be found at the link above.

In our continuous effort to reinforce our legal framework and operational efficiency, we have engaged a prestigious US based law firm. This transition was catalyzed by our previous firm's shifting dynamics and their underwhelming progress concerning the banking aspects of the Gray Market ecosystem. Their renowned blockchain, digital assets, and custody division synergies with their comprehensive corporate and securities expertise, making them an unparalleled ally in our quest to pioneer full-fledged banking services. These services are not confined to the blockchain space but are designed to revolutionize global access to banking.

We are on the cusp of introducing a demo of these groundbreaking banking services within the next couple of weeks. It's important to emphasize that the banking arm of the ecosystem will maintain distinct operations from the fund itself, ensuring meticulous compliance and seamless user interaction across platforms.

Key Person Insurance: A Strategic Safeguard

We recognize the potential risks associated with unforeseen circumstances befalling key members of our team. To preemptively mitigate any operational and financial instability, we are considering integrating Key Person Insurance into the Gray Market structure.

Key person insurance is instrumental in cushioning a company against the financial and operational aftershocks of losing a member vital to its function or growth. It's a testament to our foresight, ensuring business continuity, and financial security, thereby safeguarding stakeholders' interests and the company's trajectory.

Forging Strategic Alliances

Our vision for growth encompasses collaborative excellence. We are excited to announce upcoming partnerships with influential brands, including the innovative GridPlus. Detailed revelations of these collaborations, set to enhance the value and operational dynamism of Gray Market, will follow soon.

Explore the pioneering efforts of GridPlus.

Insightful Market Analysis: A Weekly Feature

Knowledge is the currency of success. I will personally curate and share a comprehensive weekly newsletter, providing a holistic view of the market dynamics, strategic insights, and a recap of significant financial undercurrents that shape our investment approach and the market at large.

$Gray Token on hold

Some may notice some changes within the website. One being the removal of the "Presale" / token page. This area of the project is currently on indefinite hold, pending all of the legal licenses we are pursuing. We have been advised that launching an unregulated token, while trying to be come fully compliant could be very problematic. As such, we have removed the page until further notice. We hope that once the legal part of the Gray Market is completely sorted, we can revisit and launch this product.

Update on Moore Gray Fund audits

Our collaboration with Moore, a globally acclaimed audit, and advisory firm, underscores our commitment to operational transparency and regulatory compliance. Audits of this scale are intricate and time-consuming, necessitating a thorough review of multiple facets of our operations. This rigorous process is crucial to ensure each operational aspect is compliant, secure, and adheres to the highest standards of corporate governance. I anticipate the Moore Audit to be completed within the coming weeks. With the transition between legal firms, there was a bit of delay in this area of development.

Over the past three months, we have been diligently working with Moore, a globally recognized auditing firm, to establish a robust and secure audit framework for our fund. The objective has always been to ensure that our trading services and financial reporting adhere to the highest standards of accuracy, transparency, and integrity.

The process has involved meticulous legal work to ensure that all aspects of our fund’s operations, especially those pertaining to privacy and security, are handled with the utmost precision and care. Given the complexity and the imperative to safeguard your interests, this has taken longer than initially anticipated.

Here’s a brief overview of the progress and next steps:

Legal Framework: Ensuring that all legal paperwork and compliance checks are thoroughly vetted and aligned with international standards.

Privacy and Security: Establishing stringent protocols to safeguard the privacy and security of our trading services and your investments.

Monthly Audits: Once set up, Moore will conduct monthly audits to provide ongoing assurance regarding the performance and management of The Gray Fund.

We understand that this delay might be concerning, but please be assured that these steps are crucial to ensuring the long-term stability and reliability of The Gray Fund. Our commitment to transparency and safeguarding your investment is paramount, and we believe that this thorough audit process will significantly enhance the trust and performance of our fund.

What to Expect Next:

Timely Updates: We will continue to keep you informed about the progress of the audit setup process.

Transparency: Once the audit process is complete, we will share summarized findings to maintain transparency about the fund’s performance and management.

For more information on Moore, please checkout their website.

Breaking Down Gray Fund Caps

The Gray Fund is meticulously designed to optimize investment growth while mitigating risks, operates within defined financial thresholds, notably a soft cap and a hard cap.

Soft Cap: Positioned between $25M and $30M USD, the soft cap serves as a preliminary financial checkpoint. Upon reaching this cap, the fund management may halt or reevaluate accepting investments from new investors, allowing for a strategic review and potential recalibration of investment strategies. This ensures that the fund can sustainably manage its growth while providing investments the opportunity to mature within a controlled financial environment.

Hard Cap: The hard cap, set between $50M and $70M USD, acts as the upper financial limit of the fund. As the fund approaches this cap, deposits will begin to taper, ensuring that the fund does not exceed its defined upper limit. Once the hard cap is reached, participating members may be mandated to conduct withdrawals, adhering to the fund’s policy and ensuring it remains within the prescribed financial boundaries.

Key Considerations for Investors

Transparent Communication: Regular updates through monthly reports and website information will keep investors informed about the fund's status, especially as it approaches and surpasses the soft cap and nears the hard cap.

Strategic Investment Management: As the fund nears the hard cap, the tapering of deposits will be strategically managed to ensure that the fund does not exceed its upper limit, maintaining a balanced and sustainable growth trajectory.

Risk Management: The fund management will continually assess and manage risks, ensuring that investments are safeguarded and the fund operates within its defined financial parameters.

Regulatory Compliance: Ensuring that the fund adheres to regulatory guidelines, especially in the context of mandatory withdrawals upon reaching the hard cap, is pivotal to maintaining the integrity and legal standing of the fund.

Detailed Financial Strategy (Caps)

Deposits: Generally set around $1.9M - $2.2M per month, the deposits are designed to taper by 10% each subsequent month. This means that if the deposit in October is $2.2M, it will be reduced to $1.98M in November, $1.782M in December, and so on. This tapering strategy is particularly crucial as the fund approaches the hard cap, ensuring that it does not exceed the upper financial limit and maintains a sustainable growth trajectory.

Withdrawals: A consistent average projected withdrawal of $1M per month is maintained throughout the projected period. This steady withdrawal rate provides a predictable outflow that can be strategically managed within the fund’s growth and investment returns.

Investment Returns: The investment returns are projected to vary between 10% and 20% per month, providing a robust yet varied growth trajectory for the fund. This variability accounts for potential fluctuations in the market and investment performance.

Benchmark Goal: The fund aims to maintain a benchmark goal of 10% returns. This benchmark serves as a baseline target, ensuring that the fund is consistently aiming to achieve a solid and sustainable growth rate, while also navigating through the variable market conditions.

Chart Data Explanation

The data points below are for reference only, and do not indicate future fund returns, results, deposits, or withdrawals. Data points are based on past fund averages. These are examples only to better understand how the chart and dates are calculated.

October: Starting Fund Value: $20.8M Deposits: $2.2M Withdrawals: $1M Return: 16%

(20.8M + 2.2M - 1M) \times 1.16 = 25.52M

November: Starting Fund Value: $25.52M Deposits: $1.98M (tapered by 10%) Withdrawals: $1M Return: 15%

(25.52M + 1.98M - 1M) \times 1.15 = 30.675M

December: Starting Fund Value: $30.675M Deposits: $1.782M (tapered by 10%) Withdrawals: $1M Return: 14%

(30.675M + 1.782M - 1M) \times 1.14 = 36.118M

Based on the calculated data:

The soft cap (between $25M and $30M) would be reached between October and December.

The hard cap (between $50M and $70M) would be reached between February and May.

It's important to note that these estimations are based on the provided deposit, withdrawal, and return rates, which are subject to change based on user specific deposits, user specific withdrawals, and fund specific returns. Actual market conditions, investment performance, and changes in deposit and withdrawal rates will impact when these caps are reached. Therefore, these estimations should be used as a general guideline and not a precise prediction.

These calculations provide a snapshot of the fund’s projected growth, taking into account the tapering deposits, consistent withdrawals, and variable investment returns. The fund value increases each month, reflecting the net effect of the deposits, withdrawals, and investment returns.

It's crucial to note that the withdrawals and return percentages can and will vary, reflecting the dynamic nature of the financial markets and the strategic adjustments made by fund management. The benchmark goal of 10% serves as a guiding target, ensuring that the fund is consistently striving to achieve a robust and sustainable growth rate amidst the variable market conditions.

In summary, The Gray Fund is strategically positioned to navigate through its defined soft and hard caps, ensuring sustainable growth, prudent risk management, and adherence to regulatory guidelines. Investors are encouraged to stay informed through the fund’s regular updates and communicate with fund management for any detailed inquiries or clarifications. The detailed financial strategy, including the tapering deposits, consistent withdrawals, and variable investment returns, is designed to optimize the fund’s performance while safeguarding its financial stability.

Why is there a cap?

The use of caps in investment funds is a common strategy, especially in the realm of alternative investments like hedge funds and private equity funds. Caps can help manage the size of the fund, ensuring that it remains nimble and can achieve its targeted returns without being bogged down by excessive capital. Here are a few examples of how caps have been employed in the real world:

Bridgewater Associates: Bridgewater, one of the world's largest hedge funds, has historically used caps to manage the size of its funds. For instance, its flagship fund, Pure Alpha, has been closed to new investors multiple times in the past when it reached certain capital thresholds. This strategy ensures that the fund can continue to operate efficiently and achieve its targeted returns.

Sequoia Capital: This renowned venture capital firm has, in the past, returned capital to its investors because it exceeded the amount they believed they could invest effectively. By doing so, they maintained the fund's size within a manageable limit, ensuring that they could continue to make high-quality investments.

Renaissance Technologies: The Medallion Fund, managed by Renaissance Technologies, is one of the most successful hedge funds in history. Due to its success, it has attracted a lot of capital. However, the firm has returned capital to investors on several occasions to keep the fund's size manageable. They believe that a smaller fund size allows them to achieve higher returns.

In all these examples, the underlying theme is that fund managers believe there's an optimal amount of capital they can manage effectively. Exceeding this amount can dilute returns and make the fund less nimble. Caps, whether soft or hard, are tools that help managers keep fund sizes in check, ensuring they can continue to meet or exceed their targeted returns.

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