Sygnum's New Ethereum Fund Targets 8–10% Annual Returns in ETH

Swiss digital asset bank Sygnum opened its Sygnum ETH Alpha Fund SP to qualified investors on November 2, targeting annual returns of 8% to 10% in ETH after fees. The target is an objective, not a guarantee, and the fund's own documentation discloses derivatives, staking, liquidity, counterparty and trading-system risks, with leverage used in some strategies that may amplify losses in volatile markets.

The product, announced Thursday and managed through Sygnum Asset Management under Sygnum Bank AG's Investment Solutions department, is available in approved markets including Switzerland. It requires a minimum investment of $100,000 or its ETH equivalent, processes subscriptions monthly with two business days' notice, and accepts redemptions on 15 calendar days' notice, subject to an investor-level redemption gate of up to 10%.

For context, Sygnum estimates that conventional ETH staking currently yields roughly 2% to 3% per year. The fund's stated target is therefore roughly three to four times that baseline — an ambitious spread that depends entirely on the performance of layered trading strategies.

How does the fund generate returns?

The strategy starts with native Ethereum staking, in which holders help secure the blockchain and receive protocol rewards. On top of that base, the fund adds:

• Options premiums from selling contracts;
• Arbitrage between trading venues to capture pricing differences;
• Derivatives funding strategies that seek income from differences in financing costs between positions.

Sygnum describes these trading approaches as market-neutral, meaning intended returns do not depend primarily on Ethereum's price rising. That claim deserves scrutiny: the strategies may be hedged against price direction, but the fund's underlying asset remains ETH, and performance is recorded in ETH rather than dollars.

The denomination choice cuts both ways. Investors who gain ETH still see their dollar-measured holdings shrink if ETH's dollar price falls. Sygnum's own materials acknowledge this asymmetry, and it is the central caveat for any institution benchmarking the product against dollar-denominated alternatives.

Markus Hämmerli, Sygnum's head of asset management and the fund's lead, framed the product around how institutions now account for the asset. "Institutions that hold ETH for the long term increasingly think in ETH, not dollars," Hämmerli said. He said the fund combines staking with income-generating strategies intended to increase the amount of Ethereum investors hold — an intention, not a certainty, and the disclosed risk factors say as much.

Where is the trading collateral held?

The fund executes its strategies through Sygnum Protect, the bank's off-exchange custody service. Under this arrangement, collateral remains with Sygnum while investment managers trade through supported venues. The structure reduces client assets held directly on cryptocurrency exchanges, a meaningful risk control given the industry's history of exchange failures, though Sygnum concedes it does not eliminate trading or counterparty risk.

Sygnum has built out this infrastructure incrementally. In March 2025, it added derivatives exchange Deribit to Sygnum Protect. More recently, Sygnum was identified as a custody partner when Bitget introduced off-exchange trading arrangements for institutional clients.

What comes next for Sygnum's alpha products?

The Ethereum launch follows the October 2025 debut of the BTC Alpha Fund, developed with Starboard Digital, which targets the same 8% to 10% annual return range in Bitcoin after fees and combines BTC exposure with arbitrage strategies. Sygnum has also continued supplying crypto infrastructure to traditional banks: in July 2026, Swiss bank BancaStato introduced crypto trading through an integration involving Sygnum and banking software provider Avaloq, letting BancaStato customers buy, hold and sell Bitcoin, Ethereum, Litecoin and Solana.

Whether the ETH Alpha Fund meets its target will be testable only over full market cycles, and the 10% redemption gate means investors cannot fully exit on short notice. Institutions weighing the product should watch reported net-of-fee performance in ETH terms against the 2% to 3% staking baseline once the first reporting periods close.