[BTC-EQTY] Version 2 - An Investment fund with proven returns!

[xaviarlol]

Hi all,

Some people may have remembered a few months ago when I was going to open this fund publicly, but changed my mind and kept it private, but published its result publicly. The results can be found here: https://docs.google.com/spreadsheet/ccc?key=0AuQ3xQRnpXqEdG5yMHZCaVkydWM5V1pzZld6WmtZa2c&usp=sharing

Well, after a few months of publicly achieving a very impressive return on investment for my own private investment, I now feel I have the confidence, and I am ready to handle other investor's money.

The first fund achieved the following results:
-  +76.57% profit in just 57 days of investing
-  Annual rate of return of an extremely impressive +765.66% (though it is very unlikely that this would remain so high over the long term)
-  It turned 58.8 BTC in to 103.82 BTC in just 57 days


So without further ado...

I'd like to introduce my new virtual Investment Fund - BTC-EQTY (Formal name is BTC EQUITY). BTC EQUITY is an investment fund that invests in Bitcoin related companies/businesses such as ASICMINER, Just Dice and other companies that show promise. I only invest in areas that I feel have a very good chance of earning a good profit, and I am quite strict and picky when choosing these.

For below reference/definition, I am the fund manager.

Why choose BTC EQUITY and not invest in companies yourself?
This is a question everyone should ask themselves. Many people prefer to have direct control over their own investments and make investment choices with what they feel are good choices. What I offer is that I think I can beat the average investor in terms of returns, due to my extensive experience in share-trading and investment products. The second thing BTC EQUITY can offer is buying power resulting in more profitable deals. When we have enough investors and BTC capital, we will attempt to buy up assets in bulk for lower prices, resulting in better margins for all of our members.

And lastly, a lot of people may not want to spend time doing market research, buying and selling, investigating new assets, keeping up with the latest news etc. We offer a managed service in which you can just sit back and have someone experienced manage the investment for you.

I will have a large investment with my own BTC in this fund, and all future funds. This intrinsically links the success of the fund to my own.

How does it work?

This fund will be called "BTC-EQTY-B". Of this amount, I personally will always have a large stake in the fund. At this time, I will be placing a minimum amount of shares that you can buy, as I don't want to have too many shareholders to begin with, as I will be managing the shareholder database. In the future, I may list on an exchange, which then will allow for buying and selling in and out of the fund a lot easier.

Investing in the investment fund is very simple. There will be 1,000 shares in total, and I will own 100% of these shares to begin with. If you want to buy a share in the fund, you will be issued with shares by the fund manager (me). I will always retain a large percentage of the fund, so that people will always have confidence that my own money is also at stake, and tied to the funds performance.

The share price for each share will be the Net asset value (NAV) of the fund per share, less a 5% fee. So for example, if the current fund assets are 200 BTC, and you wish to buy 1 share, the share will cost 200/1000 = 0.2 BTC per share plus 5% fee = 0.21 BTC per share. At this time, a minimum of 10 shares per person is required if you are interested in buying shares.


How much transparency will you be offering?
There will be public monthly statements hosted on google drive, showing the asset balance sheet, the profit/loss and all other relevant information. There will be graphs, statistics etc also.

Can I "sell-out" at any time?
Yes, you can sell out to either another individual privately, or sell to the fund manager who will always pay 95% of the NAV at the time of sale transfer. Otherwise, the fund will eventually end (there will be an end-date period specified), and all holders will be paid out fully at that time. There are other circumstances that can result in the fund selling off early, or being extended. Likely via a majority vote.

Can I buy in to the fund at any time?
You can buy a share in the fund until 50% of the fund is already been purchased by the public this is because the fund manager will usually hold at least 50% of the fund. When that happens, the only way to buy in to the fund after the initial issuing is to buy a share from an existing holder of the fund for an agreed value, (the fund manager may be able to provide escrow if you wish) or wait until someone cashes out to the fund manager, which would give the fun manger more than 50%, and allow him to sell more to the public.

Can I lose my money? How risky is this?
This fund is reasonably low-risk. But a low-risk bitcoin related investment translates to a very high risk investment overall.

Bitcoins are very risky investments, anything related to bitcoins are risky at this point. There is a very real risk of making significant losses by buying in to this fund, or any other fund, or any bitcoin asset. You have probably heard this warning everywhere surrounding bitcoins, but again - Do not invest funds that you can't afford to lose!

How do dividends work?
Dividends are issued at the discretion of the fund manager. However, in most cases, 100% of the net income that the fund generates will be paid as a dividend, less the management fee. There may be some instances where assets are sold off with the intention of providing a large dividend to shareholders, particularly if the NAV increases substantially. But typically assets are not sold off. Dividends are paid monthly.

What are the fees?
The fee is structured based on the performance of the fund. This is done to protect the fund members from paying a lot of fees if the fund is performing poorly. I feel this is the most honest and fair way of charging the fee.

Fee structure as follows:
One-off: There is a one-time fee of 5% at the time of purchasing in to the fund. So if you buy 10 shares at 0.2 BTC each = 2BTC the fee is 0.1BTC (meaning you will need to pay BTC0.1 to the fund issuer.)

Performance based fees: A 5% fee on dividends issued, at time of dividend distribution. Eg. If the fund net profit for the month is +10 BTC, a fee of 0.5BTC is deducted, and the remaining 9.5 BTC is distributed to all share holders. There will be no performance fee if the fund doesn't generate any income. When the fund ends, a 5% fee on NET PROFIT ONLY will be deducted from your final payout.

The only other fee is only deducted if you sell off your shares to the fund manager before the fund ends. The fund manager will always buy your shares back at 95% NAV per share.

Will you be listing your funds on issuers such as btct.co ?
Almost certainly at some stage. For now, this fund will be privately maintained.

How much money will I make?
As said above, all Bitcoin related investments are risky. You might lose most of your money, break even, or make 10x your money. I am merely providing you with my expertise and knowledge, to give you a better chance of getting a return on your bitcoin investment.

Do I have any recourse if something goes wrong?
Every effort will be made to be as fair and transparent as possible. I cannot guarantee that nothing will go wrong, but I can guarantee that I will act responsibly and with integrity. If that is not enough, than his might not be for you.

Do the funds "end"?
The funds will run their course eventually. All fund members are allowed to sell-out at any point, so this may happen naturally. There will be an end-date period specified, and all holders will be paid out fully at that time. There are other circumstances that can result in the fund selling off early, or being extended. Likely via a majority vote. If majority votes to keep the fund active but you want to be paid out, there will be an option created for you to freely do that at that time.

Can I have a say in what is invested in?
I will definitely listen and consider fund members thoughts and requests, and usually discuss big decisions first with investors.
------------------------
FUND B DETAILS
Total fund assets: ~190 BTC
Total shares: 1,000
NAV (est): ~0.19 BTC per share
Statements / Dividend frequency: Monthly
Focus: Securities, fixed interest & Gambling equity
Duration: 6 months (can be ended earlier or later) Ends January 20th 2014.


The current NAV of this fund is ~192 BTC at the time of this posting. If you want to see asset details, what the fund is currently worth and more, go to https://docs.google.com/spreadsheet/ccc?key=0AuQ3xQRnpXqEdG5yMHZCaVkydWM5V1pzZld6WmtZa2c&usp=sharing The fund is listed as FUND B.

If you are interested in buying shares in the fund, please either send a private message to me, or post below. Please include how much BTC you want to invest and we can proceed from there.

[1715094333]

1715094333

[1715094333]

1715094333

[1715094333]

1715094333

[1715094333]

1715094333

[1715094333]

1715094333

[alphabet]

How much transparency will you be offering?
There will be public monthly statements hosted on google drive, showing the asset balance sheet, the profit/loss and all other relevant information. There will be graphs, statistics etc also

I can't see it in your original post but since this fund has been operating privately for a few months can you give us a breakdown of what assets you have purchased and sold during that time and what assets you currently hold within the fund. The only breakdown I currently see is on the Google docs page which only tells me that you have bitcoins in Just-Dice and "securities" but I might be missing where you tell you are invested in, am I?

[xaviarlol]

How much transparency will you be offering?
There will be public monthly statements hosted on google drive, showing the asset balance sheet, the profit/loss and all other relevant information. There will be graphs, statistics etc also

I can't see it in your original post but since this fund has been operating privately for a few months can you give us a breakdown of what assets you have purchased and sold during that time and what assets you currently hold within the fund. The only breakdown I currently see is on the Google docs page which only tells me that you have bitcoins in Just-Dice and "securities" but I might be missing where you tell you are invested in, am I?

Heya,

At the bottom of the spreadsheet, you can click on one of the other tabs that shows more detail on what the fund is/was invested in at that time, and for how much. Note that July for FUND B just started, so there is less data than FUND A.

[stslimited]

My private fund has done better. But I was advertising an algorithmic one here a few months ago, what I've done were all my own trades manually though.

I guess I could get my BTCT.CO trade history and Bitfunder trade history

anyway PM me if interested, xaviarlol

[alphabet]

How much transparency will you be offering?
There will be public monthly statements hosted on google drive, showing the asset balance sheet, the profit/loss and all other relevant information. There will be graphs, statistics etc also

I can't see it in your original post but since this fund has been operating privately for a few months can you give us a breakdown of what assets you have purchased and sold during that time and what assets you currently hold within the fund. The only breakdown I currently see is on the Google docs page which only tells me that you have bitcoins in Just-Dice and "securities" but I might be missing where you tell you are invested in, am I?

Heya,

At the bottom of the spreadsheet, you can click on one of the other tabs that shows more detail on what the fund is/was invested in at that time, and for how much. Note that July for FUND B just started, so there is less data than FUND A.

Ahh Knew I was missing something simple!

edit: I'm blind as per

[Voodah]

Interesting. Good luck !

[Deprived]

Wow - some pretty amazing blunders here.

The share price for each share will be the Net asset value (NAV) of the fund per share, less a 5% fee. So for example, if the current fund assets are 200 BTC, and you wish to buy 1 share, the share will cost 200/1000 = 0.2 BTC per share minus 5% fee = 0.19 BTC per share. At this time, a minimum of 10 shares per person is required if you are interested in buying shares.

First time I've ever seen a fee DEDUCTED from the price charged for shares.  It's more normal to add it on - existing investors don't generally like new ones buying in for LESS than the value of units.

Zero mention about diversification/spreading risk other than a claim that it's low risk.  The previous incarnation had 2/3 of all assets in one single security (ASICMINER) which is hardly a low-risk strategy - plus there's already loads of ASICMINER pass-throughs anyway.

Monthly fee is taken on profits - but with zero mention of whether or how losses are carried over to offset future profits.  This coupled with no defined method for valuing shares is horribly open to abuse.

etc

EDIT:  Checked spreadsheet and looks like a bit under 200 BTC of assets there, so removed my comments asking about starting assets.

[xaviarlol]

Wow - some pretty amazing blunders here.

The share price for each share will be the Net asset value (NAV) of the fund per share, less a 5% fee. So for example, if the current fund assets are 200 BTC, and you wish to buy 1 share, the share will cost 200/1000 = 0.2 BTC per share minus 5% fee = 0.19 BTC per share. At this time, a minimum of 10 shares per person is required if you are interested in buying shares.

First time I've ever seen a fee DEDUCTED from the price charged for shares.  It's more normal to add it on - existing investors don't generally like new ones buying in for LESS than the value of units.

Thanks for pointing that out - it was a wording mistake on my part. The 5% fee is on top of the share price, not a discount. I will adjust the OP.

Zero mention about diversification/spreading risk other than a claim that it's low risk.  The previous incarnation had 2/3 of all assets in one single security (ASICMINER) which is hardly a low-risk strategy - plus there's already loads of ASICMINER pass-throughs anyway.

The spreadsheet shows the exact assets, and even has a pie chart! ASICM makes up of around 39% of the total portfolio.

Monthly fee is taken on profits - but with zero mention of whether or how losses are carried over to offset future profits.  This coupled with no defined method for valuing shares is horribly open to abuse.

Fees are only taken from income, not increased value of assets. Income consists mainly of dividends, which the fees come out of. I will re-word this in my OP.

[Deprived]

Fees are only taken from income, not increased value of assets. Income consists mainly of dividends, which the fees come out of. I will reward this in my OP.

That's not a policy I recommend for a few reasons:

1.  It encourages the issuer to invest in assets which pay high dividends but lose share price fast.  So if you invest in a PMB that only veer pays back half what you paid for it you still get a management fee for a horribly bad investment.
2.  It discourages investments which would be profitable but not pay dividends (or where only a small part of profit is returned in dividends) - as you don't get fees on them.

Basically it puts the managers interests out of alignment with those of investors.  Investors want profit, manager makes most by going for dividend churn-rate.

You're by no means alone in this misguided viewpoint - somewhere along the line a large chunk of the "investment" scene here have totally confused dividends with profits.  It may be a natural extension of the abusive mining securities that take a management fee as percent of turnover (coins mined) regardless of how much profit (or, more usually, loss) investors are making.

EDIT: I should add that I like your spreadsheet - clear and easy to understand.

[krudkeeper]

capital gain is income

[alexius89]

an IPO on bitfunder, btct, havelock would be very fine for all potential investors ;-)

[xaviarlol]

Fees are only taken from income, not increased value of assets. Income consists mainly of dividends, which the fees come out of. I will reward this in my OP.

That's not a policy I recommend for a few reasons:

1.  It encourages the issuer to invest in assets which pay high dividends but lose share price fast.  So if you invest in a PMB that only veer pays back half what you paid for it you still get a management fee for a horribly bad investment.
2.  It discourages investments which would be profitable but not pay dividends (or where only a small part of profit is returned in dividends) - as you don't get fees on them.

Basically it puts the managers interests out of alignment with those of investors.  Investors want profit, manager makes most by going for dividend churn-rate.

You're by no means alone in this misguided viewpoint - somewhere along the line a large chunk of the "investment" scene here have totally confused dividends with profits.  It may be a natural extension of the abusive mining securities that take a management fee as percent of turnover (coins mined) regardless of how much profit (or, more usually, loss) investors are making.

EDIT: I should add that I like your spreadsheet - clear and easy to understand.

There is a fee on net profit at the end of the fund life when everyone divests (in fact, 5% on net profit, same as the dividend fee) and if people sell back to the fund manager (ie me). So it is in my best interest to keep the assets just as strong. It ends up being 5% on net profit regardless of if its dividend income or appreciating asset value, so it's really all about the value when choosing investment options. Thanks for pointing it out

[xaviarlol]

an IPO on bitfunder, btct, havelock would be very fine for all potential investors ;-)

I considered it - I probably will list at some point. I structured the fund in a way where such a listing isn't necessary. Investors can sell out of the fund at absolutely any time back to me, I think that's pretty neat. Otherwise, the funds are temporary and will pay out all investors when it ends. There isn't really a need for extra liquidity with this structure.

[Adamlm]

Looks interesting.
Are exact start/end dates defined? Or should I assume it will last 6 months from today?

[Deprived]

Fees are only taken from income, not increased value of assets. Income consists mainly of dividends, which the fees come out of. I will reward this in my OP.

That's not a policy I recommend for a few reasons:

1.  It encourages the issuer to invest in assets which pay high dividends but lose share price fast.  So if you invest in a PMB that only veer pays back half what you paid for it you still get a management fee for a horribly bad investment.
2.  It discourages investments which would be profitable but not pay dividends (or where only a small part of profit is returned in dividends) - as you don't get fees on them.

Basically it puts the managers interests out of alignment with those of investors.  Investors want profit, manager makes most by going for dividend churn-rate.

You're by no means alone in this misguided viewpoint - somewhere along the line a large chunk of the "investment" scene here have totally confused dividends with profits.  It may be a natural extension of the abusive mining securities that take a management fee as percent of turnover (coins mined) regardless of how much profit (or, more usually, loss) investors are making.

EDIT: I should add that I like your spreadsheet - clear and easy to understand.

There is a fee on net profit at the end of the fund life when everyone divests (in fact, 5% on net profit, same as the dividend fee) and if people sell back to the fund manager (ie me). So it is in my best interest to keep the assets just as strong. It ends up being 5% on net profit regardless of if its dividend income or appreciating asset value, so it's really all about the value when choosing investment options. Thanks for pointing it out

If you make a profit it works out roughly the same as a monthly fee on profits, yes.  But difference is if investors make a loss you still take 5% of all received dividends - hence why I don't like it as a system for funds (where investors rely on the management's decisons - so management fee should be based on how well management deliver profit for investors).

[xaviarlol]

Fees are only taken from income, not increased value of assets. Income consists mainly of dividends, which the fees come out of. I will reward this in my OP.

That's not a policy I recommend for a few reasons:

1.  It encourages the issuer to invest in assets which pay high dividends but lose share price fast.  So if you invest in a PMB that only veer pays back half what you paid for it you still get a management fee for a horribly bad investment.
2.  It discourages investments which would be profitable but not pay dividends (or where only a small part of profit is returned in dividends) - as you don't get fees on them.

Basically it puts the managers interests out of alignment with those of investors.  Investors want profit, manager makes most by going for dividend churn-rate.

You're by no means alone in this misguided viewpoint - somewhere along the line a large chunk of the "investment" scene here have totally confused dividends with profits.  It may be a natural extension of the abusive mining securities that take a management fee as percent of turnover (coins mined) regardless of how much profit (or, more usually, loss) investors are making.

EDIT: I should add that I like your spreadsheet - clear and easy to understand.

There is a fee on net profit at the end of the fund life when everyone divests (in fact, 5% on net profit, same as the dividend fee) and if people sell back to the fund manager (ie me). So it is in my best interest to keep the assets just as strong. It ends up being 5% on net profit regardless of if its dividend income or appreciating asset value, so it's really all about the value when choosing investment options. Thanks for pointing it out

If you make a profit it works out roughly the same as a monthly fee on profits, yes.  But difference is if investors make a loss you still take 5% of all received dividends - hence why I don't like it as a system for funds (where investors rely on the management's decisons - so management fee should be based on how well management deliver profit for investors).

I disagree that this is a problem. Management fees go towards the maintaining and work done on the fund, if the entire market falls, or rises, that doesn't really change that fact. This isn't a charity

Also as an example, an investor may make bad decisions on their own and lose more than the fund will lose (if you agree that this fund is "smarter" than the average person, which is fundamentally why investors choose managed funds over doing it themselves), and that is no different to making a profit.

Looks interesting.
Are exact start/end dates defined? Or should I assume it will last 6 months from today?

Yeah sorry, the end date is January 20th 2014. But it can end earlier, or later if there is a demand to do so.

[Adamlm]

Thanks for clarification.
I want to buy 5 shares.

Edit: I didn't notice that the min. purchase is 10 shares, so I'm in for 10.
Payment sent.

[xaviarlol]

Some interim results:

In just the first 4 days of trading, this fund has already achieved a very large profit. The fund as generated a profit of +14.61770470 BTC, or +7.59%, in just 4 days!

The performance thus far is very pleasing, and if it performs this well in the future we will all be very happy investors

[xaviarlol]

There will be more during the next report date, but I think something worth mentioning is that BTC-EQTY's J-D investment greatly out-performed Just-dice's benchmark house profit, once again indicating that BTC-EQTY provides above-average returns.

As at the time of this post, BTC-EQTY's position in JD is +18.16%, while the JD house profit position is +0.2571%. This basically means that the total ROI from JD was +0.2571%, where as BTC-EQTY's same position on that investment is +18.16%.

BTC-EQTY is also now selling bonds, for those people who want risk-free guaranteed returns, paid upfront!. Current return for those bonds is 21.9% APR. More info in this thread: https://bitcointalk.org/index.php?topic=260986.0

[Deprived]

There will be more during the next report date, but I think something worth mentioning is that BTC-EQTY's J-D investment greatly out-performed Just-dice's benchmark house profit, once again indicating that BTC-EQTY provides above-average returns.

As at the time of this post, BTC-EQTY's position in JD is +18.16%, while the JD house profit position is +0.2571%. This basically means that the total ROI from JD was +0.2571%, where as BTC-EQTY's same position on that investment is +18.16%.

BTC-EQTY is also now selling bonds, for those people who want risk-free guaranteed returns, paid upfront!. Current return for those bonds is 21.9% APR. More info in this thread: https://bitcointalk.org/index.php?topic=260986.0

I notice the bonds claim to be secured against all of BTC-EQTY's assets.  Does that mean the benefit and risk of the bonds gos to BTC-EQTY investors (i.e. the capital raised from them is an asset and their face-value is a liability)?