Birkoa Newsletter 51 (end of H1 2025)
Overview
This mid-year update covers Birkoa's strong H1 2025 performance, strategic market positioning amid evolving geopolitical conditions, and outlook for continued growth driven by AI, cryptocurrency, and macroeconomic trends.
Executive Summary
Strong Performance: Max Fund delivered 23% YTD returns (net of fees) with 2x leverage, while the de-levered Pro Fund achieved 15% returns, both significantly outperforming the S&P 500's 5.5% growth. Risk-adjusted metrics remain robust with Sharpe ratios of 0.77-1.48 and Sortino ratios of 1.36-3.08 across strategies.
Strategic Positioning: Our significant exposure to AI and technology sectors proved prescient as these areas remained resilient amid tariff uncertainties. Cryptocurrency holdings benefited from legislative developments and dollar weakness, while our China and Japan positions remain positioned for long-term growth in AI and EV sectors.
Market Outlook: Stabilizing geopolitical conditions, potential rate cuts, and favorable regulatory environment for crypto assets support continued strong performance expectations for the remainder of 2025.
Dear Investors and Partners,
As we reach the midpoint of 2025, we are thrilled to share an update on Birkoa's performance and the strategic insights that have guided us through an eventful first half of the year.
Performance Overview (As of June 2025)
As we close out the first half of 2025, we are excited to share that our Max Fund, which operates with a 2x leverage strategy, has achieved a remarkable 23% return year-to-date, net of fees. Our Pro Fund, which follows the same strategy but with deleveraged exposure, has delivered a solid 15% return net of fees. In comparison, the S&P 500 has grown in gross by approximately 5.5%, with the NASDAQ showing similar growth.
Our performance data is also available on Preqin, the leading database for alternative investments. In terms of risk-adjusted performance, our Max strategy boasts a Sharpe ratio of 0.77 over the past 12 months and 0.97 over the past two years. The Sortino ratio stands at 1.36 for the past year and 1.95 for the past two years. For the Pro strategy, which launched in May 2024, the Sharpe ratio over the past year is 1.48, and the Sortino ratio is an impressive 3.08, highlighting strong risk-adjusted returns.
Notably, our main strategy, now running for just over three years, has seen nearly all of our early investors more than double their initial investments, with over 100% net returns in that timeframe.
Geopolitical and Macroeconomic Overview
Over the past few months, one of the most significant influences on the markets has been the U.S. administration's evolving tariff policies. The uncertainty surrounding these tariffs earlier this year led to a period of increased volatility, particularly in March and April. However, as the administration has shifted towards a more measured approach, we've seen greater stability return to the markets, and our portfolios have rebounded strongly by May and June.
A key advantage for us has been our significant exposure to AI and technology sectors. AI continues to be a cornerstone of geopolitical strategy, and our thesis that AI would play a crucial role in global politics has proven accurate. This sector has remained resilient and continues to perform strongly for us.
On the monetary policy front, while we haven't yet seen the rate cuts many anticipated earlier in the year, the current outlook suggests potential cuts later in the year. Regardless, our portfolios have performed well in the current environment, and any future rate cuts would likely provide an additional boost, especially to our AI, semiconductor, and cryptocurrency holdings. Commodities, too, stand to benefit from a weaker dollar and potential monetary easing, further strengthening our positions in metals and other key resources.
While our China positions have seen some fluctuations, we remain confident in the long-term prospects of China's AI and EV sectors, which are national priorities. Similarly, Japan's recovery and its strong ties with the U.S. in technology and electronics continue to support our positions there. While there is still room for growth, we remain optimistic about the performance of our investments in both China and Japan.
Cryptocurrencies and Legislative Impact
One of the standout performers in our portfolio this year has been the cryptocurrency sector and related equities. Recent legislative developments, including what has been dubbed the "One Big Beautiful Bill," have contributed to a weaker dollar by expanding the national deficit. This environment has been favorable for cryptocurrencies, as a weaker dollar often drives investors towards alternative assets. Additionally, the regulatory clarity and support signaled by recent legislation involving stablecoins have created a more conducive environment for growth in the crypto space.
We believe that, as the dollar experiences downward pressure, cryptocurrencies and crypto-adjacent equities will continue to thrive. This sector has already benefited from positive political and regulatory momentum, and we anticipate that any further monetary easing will amplify these gains. In short, our strategic positioning in the cryptocurrency market is poised to benefit from these macroeconomic trends.
Looking Ahead
In summary, the first half of 2025 has reinforced our strategic positioning and validated our long-term investment theses. We are confident that the stability we are seeing on the geopolitical front, coupled with positive macroeconomic trends and legislative developments, will continue to drive strong performance in the months ahead. We appreciate your trust and partnership and look forward to continuing this journey of growth and success together.
Sincerely,
Pranjit K. Kalita
Chief Investment Officer