Q: What is MECHCalvin fund?
A: It is a private, open-end, no-load mutual fund run by me.
Q: What is mutual fund?
A: Mutual fund is a type of professionally-managed collective investment scheme that pools money from many investors to purchase securities. In simple term, if you have only $100, you cannot do anything in any kind of investment market, however if you collect $100 each from 100 people, then it will give you a lot more buying options on the market.
Q: If I already have a lot of money, what are the benefits to join a mutual fund?
A: Mutual fund combine a lot of people’s little financial effort to make a different, even you have a lot of money in your own term, combine with others money to form a pool will always give a stronger position on the market. Other than that, people who join a mutual fund usually fit the following conditions:
- Have a lot of capital but don’t know how to invest.
- Professionals know how to invest but don’t have time!
- Know how to invest, but do not have a lot of capital so cannot do it on their own
Q: What is an open-end fund?
A: open-end fund has no fixed subscription amount, which give investors option to subscribe and withdraw this fund anytime they want. Contrast to close-end fund, which issued a fix amount of subscription, so if investors who subscribed want to withdraw, they must first find a buyer.
Q: What is a no-load fund?
A: most mutual fund on the public market ran by professional will charge you in many ways, because mutual fund is a business, the charges usually includes:
- Management fee
- Initial charge (aka front load)
- 12b-1 charge (An extra fee charged by some mutual funds to cover promotion, distributions, marketing expenses, and sometimes commissions to brokers)
- Commission to salesperson
Usually all these charge will eat up around 2-5% of your return based on what fund do you choose, a no-load fund means no commission, no front charge and no 12b-1 charge, only management fee. The idea of no-load fund is to get rip of all charges that will eat up investors' return.
Q: Good! If MECHCalvin fund is a no-load fund, how much you charge for the management fee?
A: Good news for you! I do not charge management fee as well, MECHCalvin fund probably the first mutual fund in the world not to charge management fee as well, basically completely free!
Q: You said mutual fund is a business, there must be expense, if you offer this for free, how do you make money from it?
A: I don't setup this fund to make money, the reason of setting up this fund is to help those incapable to increase their wealth, esp. those relatively poor people, the idea of fund is it is hard to turn $1 to $2 because you can't buy anything with $1, however if you can collect $1 million, it is much easier to turn that into $2 million, yet the gathered money must be handled by people who knows what he is doing, and the guy who know what he is doing in investment usually appear only 1 in 100.
Q: Let’s be honest, you must charge something, otherwise It sounds too good to be true!
A: I do have one charge, 1% withdraw charge, which means when you withdraw your money from this fund, I will keep 1% of your amount, the reason behind is to encourage people to do long term investment, rather come in and go out when there are ups and downs, the only way for you to grow wealth is to be patient. Yet in some special occasion, I will waive this charge as well to encourage more people to join. Also if this fund have grown to be a reasonable large size, I might consider to registered her as a listed fund for public subscription, then I will make it a proper business, and everything will charge as normal, however if you join while it is still private, you will enjoy the free charge for your life time as long as you stay.
Q: Why you want to keep it as private at this stage?
A: There are various reason, such as at this early stage all the investors are family and friends, so the nature of this fund is private anyway, yet the main reason is that private fund do not have restriction like the professionals fund managers, it gives me more flexibility in making choice, and the second main reason is this fund is still very small in size, so no need to go public.
Q: How does it work?
A: Mutual fund works in units, when you subscribe, you are actually buying a numbers of units. There is a unit price for each month, MECHCalvin fund is issued as HK$1 a unit in 4/6/2009, for example: the unit price at the end of April, 2012 is $1.1876, if you subscribe HK$10 in May, 2012, it means you have brought $10/$1.1876 = 8.4203 units, this amount of units will belong to you unless you subscribe more in the future, let’s say you do not subscribe more, after a year, the unit price has increased from $1.1876 to $1.3202, your $10 will become 8.4203 units x $1.3202 = $11.1164!
Q: Sounds good, how much should I subscribe to you?
A: The minimum subscription for this fund is HK$1, yet the question of how much you should subscribe to this fund is actually = how much you can afford x how much % you can trust me, so decide for yourself!
Q: Minimum HK$1? It must be a joke! You cannot do anything when you invest only HK$1!
A: In fact it is not a joke, first, it is a sign of trust, because from what I see, when people do not trust you, they won’t even bother to give you $1, also $1 is the minimum a person can afford, if I set the minimum like $1000, many people cannot even afford $1000. We will see what you can get from HK$1.
Q: I do not live in Hong Kong, do you accept other’s currencies?
A: Yes, at the moment I will accept HKD, GBP, USD and CNY.
Q: How do I give you money?
A: Cash, bank transfer or cheque, I have banks account in Hong Kong and England, will setup banks account in China and USA soon.
Q: Tell me more about what you will invest with my money?
A: I do not put a restriction to what I will invest, stocks, bonds, new business ideas, other mutual funds, properties, anything as long as I see it is profitable and legal, but so far it will be mainly stock (aka securities), since I see stocks are the only financial tools can give you a very surprising amount of return, with the advantage of liquidity that I can sell it whenever I like compare to the rest of the investment tools.
Q: Don't give me concept or idea, what I really want to see is your actual portfolio!
A: I only disclose my portfolio to my investors only, so put in at least HK$1 then you will able to see everything.
Q: But all funds have fund fact sheet at least for public to see the basic portfolio!
A: Mine is not a public fund, it
is a private fund. Public fund is like a public ferry, they must tell u
what on the ship to gain your trust, while private fund is like a private yacht, I don't need to tell my friend what's on my ship to gain your trust,
once you decide to hop on then you will know.
Q: Ok, fair enough, but how about fund performance? At least I need to know whether you are good at this.
A: I upload fund performance at the end of each month on this website, you can check out anytime you want.
Q: What should I expect from you if I decide to join?
A: Each month you will receive a fund report from me, one public as shown on my fund website, one is for investors only other people have no access. the public one is some general thing, while the investors only is educational.
Q: What are your advantages compare to the professional fund managers?
A: First I do not have their restriction, e.g. no 5% of your overall portfolio in a single stock, also my fund size is still very small, I can maneuver much better than the large fund, imagine when you are sailing a cruiser ($1 billion in size), how hard it is for you to make a turn? This is the difficulties of the professional fund managers facing, while I am only sailing a yacht ($1 million in size), I can turn whenever I like much faster and quicker. Secondly, my yacht is free, while you need to pay to get on their cruiser.
Q: Your fund is not established formally, how do I know you won’t take my money and run away?
A: Hahaha, the major investors of this fund are my parents, my closest friends and relative, and of course myself. You will not be the first one to find me when I run away with your money. At this early stage, everything is based on trust, so if you don’t trust me, don’t put any money here, I don’t want you not able to sleep when you have constant doubts I will run away with your money.
Q: I trust you (with whatever amount I am able to offer), but let’s say, hypothetically, what if I give you the money now and you die tomorrow?
A: Good question! I have a little black book to keep all the record of all the investors, it is written down when and how much each of the investors have invested, so when you give me money, you will also need to give me your identification, if I die tomorrow, my mother will return all the money to the investors from my bank account.
Q: A book? What if your house is on fire and burn it?
A: I carry the book closely with me everyday, like my important personal belonging.
Q: What if you lost your book?
A: I guess you are worry I do not have a backup copy, I have a e-copy on the server, also backup excel data file on my computer.
Q: Hmmm, let’s just say the ultimate worse, what if you mum die too, e.g. die with you together in an accident?
A: LOLS, we will definitely go to heaven, and my father will fit in the role of returning all the money, then you must ask what if our family dies all together? If you are really worry, I will appoint a trusted friend to do the arrangement, also when the fund has grown to a reasonable size, I will setup a legit unit trust to handle any kind of ultimate worst scenario, protection of the investors will always be MECHCalvin fund’s first priority.
Q: Ok, let’s say no one dies, but what if your fund goes bankrupt?
A: That’s the beauty of mutual fund, mutual fund can never go bankrupt, usually the general public believe banks and insurance companies has a lower risk to go bankrupt than funds, yet the truth is both banks and insurance companies can go bankrupt, because it is possible for them to have liability higher than their asset, if there are some mega accident or people withdraw a lot of money from bank, it will lead them to bankrupt. However for fund, the amount of asset a fund own can never lower than the combined asset of the total investors, if I gathered $1000 from 10 investors, I can never have liability more than $1000. so the chance of a fund go bankrupt is 0%, the ultimate worse is all asset become $0, and everyone will lost their money completely, however the chance of this happening is very close to 0% as well, how can all stocks, fund, asset I have brought suddenly become nothing? It is almost impossible!
Q: Ok, knowing it won't affect me even if you or your family die, it makes me feel much better, now I want to know about the return!
A: Your return will be good, that’s all I can say. No one can expect a guarantee returns in any kind of investment, because no one cannot predict what chances are in front of us, I can only say I know what a good chance is, when it comes to me I will catch it, then the return will be good.
Q: No guarantee return? It sounds like a scam!
A: Think of investment as fishing in the sea, and I am the fish man, there are too many variable in the sea I cannot control, e.g. will there be storm? Where the big fish are located? What will come next? If a fish man tell you he can guarantee how many fish he will able to catch, that’s a real scam. Any kind of investment involves risk, no risk, no return, yet a good investor will know how to minimize the risk and maximize the return, just like a fish man will catch big fish from time to time, yet he still cannot win every time. The greatest investors like Warran Buffett, John (Jack) Bogle, Philip Fisher, Benjamin Graham, they all made mistakes too, yet overall the numbers of time they have won is more than the numbers of time they have lost, it can already give you a very satisfying return.
Q: I got really scared now when you mentioned risk, but I also want to invest, what should I do?
A: Think how much % of your money you are willing to risk for a higher return, for me I put almost 90% of my personal asset into this fund because I am the kind of person can handle risk, yet not all people are like me, you have your own concern, so only invest the amount you feel comfortable to. Yet remember, anything that can give you guarantee return, e.g. saving, insurance plan, guarantee retirement plan, will definitely give you relatively low return.
Q: Now tell me more about the history, how did you start?
A: I started when I help my mom to invest when I first enter the finance sector in July, 2008, then I get a hang of it and do it quite well, so I decided to ask friends and family to join, I started from around HK$100k from 3 investors since 4/6/2009, so far (April, 2012) the size has growth to ~HK$ 500k with 86 investors.
Q: 4th, June? That’s the day for the infamous "June 4th Incident" in China, do you have special meaning to choose that day to start?
A: Errr, not really, this incident is only "famous" in Hong Kong, not a major concern when you put it on the world map, it is just a coincident I got a sum of money around that time. But I guess it makes Hong Kong people easier to remember.
Q: That’s enough, too long already, but what if I have more questions to ask you that ain’t in this FAQ?
A: contact me on facebook, or send me email to calvin.yim@mechcalvin.com
