Too Good To Refuse - WGC Fee Structure

By: Baron Kimble | 2016-07-30

After evaluating the business plan of the fund I have decided to modify the current fee structure until the fund reaches $100M in assets under management.

The fee structure will be as follows:

 

  • For investors that invest in the first $30M of AUM there will be a 0% and 10% fee structure
    • 0% management fee
    • 10% incentive fee, derived from all profits
      • Half of incentive fee in reinvested
    • 3 year guarantee
    • 1 year lockout, or 1 year minimum investment time until first draw.
    • Minimum investment of $100,000 USD

 

  • For investors that invest in the range between $30M - $100M in AUM there will be a 0% and 15% fee structure
    • 0% management fee
    • 15% incentive fee, derived from all profits
      • Half of incentive fee in reinvested
    • 3 year guarantee
    • 1 year lockout, or 1 year minimum investment time until first draw.
    • Minimum investment of $250,000 USD

 

  • For investors that invest in at greater than $100M+ AUM fee structures will be determined
    • Likelihood of 1% - 2% management fee to build out fund infrastructure
    • Likelihood of 1 year lockout

 

Full Example in Table Form:

1

Initial Investment (1/1/2016)

$100,000.00

2

Annual Return

20.00%

3

Total Profits (12/31/2016)

$20,000.00

4

Investors Share of Profit (90%)

$18,000.00

5

Incentive Fee (10%)

$2,000.00

6

Minimum (>=50%)

Incentive Fee reinvested

$1,000.00

 

 

Full Example in Table Form Based on WGC YTD Return in 2016 as of 8/1/16 (106.73%) using a initial investment of $250,000:

1

Initial Investment (1/1/2016)

$250,000.00

2

Annual Return

106.73%

3

Total Profits (12/31/2016)

$266,825.00

4

Investors Share of Profit (90%)

$240,142.50

5

Incentive Fee (10%)

$26,682.50

6

Minimum (>=50%)

Incentive Fee reinvested

$13,341.25

 

 

Chart

 

Setting this fee structure was done for several reasons:

  • Lower fees to entice investors who have a higher risk tolerance to invest in smaller funds
  • Reduce investor's cost basis and therefore increase compounding returns for investors for a minimum of three (3) years
  • To accelerate WGC's growth
  • To be more competitive within the money management space
  • To give no excuse to investor's who are willing to take risk to do so

 

 

Caveats and Disclosures:

 

Audits:

After the year ending in 2016 WGC will be fully audited by a CPA to verify all performances of WGC.

Costs of the audit are shared equally by all partners. Annual audit costs will increase (not reduce) investor basis (principle) in the firm. New investors joining the partnership share cost in all previous audits to offset this reduction in cost basis for all investors of the LP. This cost are shared proportionally to the total current MTM principle of the investors so it is shared equally relative to the principle invested.

If a high net worth (HNW) investor wishes to invest a minimum of $250k, the audit will be conducted immediately (this is being written as of 7/30/16) if the investor desires to do so. The investor may also select the independent auditor of his/her/it's choosing.

  • Ex: A higher risk appetite investor wishes to invest $1M into WGC; after speaking and agreeing with members of the LLC, the auditor is selected to be E&Y. Also the investor requests a custodian bet put in place to make sure all transfers of funds are legitimized, and outside the direct reach of the general partner.

The estimate cost for a small business audit will be between $5k - $20k annually.

 

Custodian:

In the future a custodian will be in place. The general partner will never have direct access to the funds without due cause signed off by an independent who represents the investors.

 

Regulatory Concerns:

Any regulatory concern not met will be put in and cost shared by all investors proportionally after the draw in.

 

Database listings, etc:

All in due time. 1 - 2 years.

 

 

Final Message from the Founder:

Right now WGC is a small fund, but it won't be that way for very long. This fee structure now gives any serious investor no excuses.

Two main reasons I started a fund was:

A) Make money off other people's money

B) Carried interest tax rate

After doing some research, item B is now irrelevant. But it was one of the major reasons I started WGC and was willing to trade other's capital.

In the process I also discovered I really enjoy making money for other people: It's fun, exciting, and challenging.

The stats bear out, and one stat not displayed on the performance page is:

Days since max peak if greater than 2 days (non back-to-back days of hitting new all time highs are not counted) is ~20. This means every 20 trading days WGC makes a new all time high on average. It shows the incredible resilience to the fund.

The risk is too high not to invest, or I recommend, to START investing. You can always add later if you want.

This isn't a hard sell now, you keep 90%, practically all, of the profits.

 

Regards,

Baron Kimble, CPA
CEO of White Gem Capital LLC