What exactly is Golden River business model?
Golden River do business with the role as a trusted investment advisor and investment manager based on business cooperation contract. In the US, this business model is also called as “hedge fund”. Basically, an investment manager will help clients allocate their capital intelligently into stocks, bonds or other investment vehicles to gain the most long-term capital appreciation with the lowest risks possible. The reason why a typical non-professional individual needs an investment advisor is because the investment industry is highly competitive, time-consuming, specialized and always changing, thus requires learning, adapting and new strategies to stay on top. With most of non-professional individual investors, these jobs are almost impossible due to their limited resources and time, hence they need specialized investment managers like us.
In the last 10 years in Vietnam, there is a similar hot business trend call “trusted investment” by speculators, brokerage firms’ brokers only dealing by “oral agreement” or other civil contract with clients. This particular non-legal form agreement is highly risky and unprofessional compared to Golden River due to lack of law enforcement on the trusted advisor, no independent auditor to confirm annual results, the management/performance fee calculation is still subjective with no standard, investment ability/specialist profile/risk management skill of the trusted advisor is still a big question. The consequence is that a lot of clients lost all their money because their advisor use “crazy” margin leverage, or pouring that money into elsewhere for their personal purpose without controlling from any entities.
What is the process for cooperation and capital injection?
We can summarize the investment process into 5 steps below: (1) Clients research about Golden River (2) Meet and sign contracts (3) Transfer capital through pooled account or open segregated account (4) Receive email from us with daily NAV reporting link through Google Cloud system (5) Wait for annual audited result and CEO letter at the end of every financial year.
(1) You can find details about us by this website or directly discussing via phones, email, Facebook/LinkedIn chat with us. After considering your own expectations, risk aversion, our investment strategies, fees rate, investment term as well as our management team, you have enough information to make investment decision (2) After research, you can fill the form on our website, book appointment and meet us at our office or elsewhere to discuss more and sign contracts if possible (3) After signing contracts, if you choose “pooled account” product, you can transfer money through our custodian bank account number; if you choose “segregated account” product, you need to go to our partner prime broker office, open new investment account (4) After we successfully received your capital injection, we will send you an email with daily NAV report Google Cloud link and SMS notification message (5) Finally, 10-15 working days after the end of every financial year (31-Dec), we will send email, SMS notification including CEO letter of the year, independent audit report as well as your scanned NAV digitally signed for each client, very transparent and accurate in order to make a basis for your injection/redemption decision and our fixed/performance fee calculation.
Heard that "playing the market" is easy, if I want my asset to grow 50%-100% until next year, can you do it?
If you think like that, we must answer frankly that we don’t “play” anything, and your expectation may not be suitable for Golden River at all: we don’t welcome individuals wanting unreal “get-rich-quick” scheme from speculation activities.
We only welcome prudent individual investors who consider stock market as an investment/savings channel in long term because: (1) Stock is a piece of the underlying business by nature, not lottery tickets or any gambling ticker with green/red color. Thus, if the underlying business is doing well, the stock price will grow in accordance. But for a business to grow well, it takes them at least 2-5 years to gain momentum, improve revenue/margins, buildup their human resources/distribution channel/branding and other capital expenditures investment (2) In the last 10 years of Vietnam, the savings deposit rate is around 9% per annum, VN30-Index grow approx. 10%-11% CAGR, listed corporate earnings grow around 12%-13% CAGR while their average ROE is around 12%-15%, hence our long-term delivery goal of 20%+ CAGR would have already outperformed the average by a wide margin, pretty challenging. Like legendary mutual fund manager Peter Lynch once said: people often underestimate the return of 30% per year, but if you keep that return long enough, for example decades ahead, you will soon own the entire state of America (the magic of compounding interests).
What if year-end result is loss, can you compensate loss for me?
To be honest, Golden River do not apply loss compensation rule to our cooperation contract despite that our losing odds is very low historically – as proven by investment track record since inception mid-2017 – due to 2 reasons:
Firstly, one down year in short-term is almost inevitable in stock investment because of many external reasons outside of our reach, such as economic cycle risk, pessimism psychology of the crowd, headline news, business has not been realizing its full potential, etc – which can push down the price at any time. The belief that one’s stock portfolio won’t never go down and permanently rise up is a naive, inexperienced and foolish thinking…
Secondly, the hedge fund business model basically is highly operating-leveraged. As a result, for example due to Black Swan event – such as recent Covid19 pandemic, the net asset value may down -10% at least; with assumed AUM approx 10 million USD, if we compensate loss, we have to pay 1 million USD upfront and be on-the-verge of bankruptcy despite doing nothing wrong. Besides, in global investment industry, we could conclude that there are few, or none, mutual funds/hedge funds that have such a “loss-compensation” rule since the idea is inherently unsound for highly operating-leveraged business model; if there are ones that applied, we believe they have already gone bankrupt and cannot grow larger.
Nevertheless, we always pledge to be responsible with our clients’ money by applying 3 more realistic solutions: (1) If performance of year N is at a loss, then we won’t be able to collect our fixed management fee at year N+1 – this rule was mentioned in the contract appendix (2) We have “high-water mark” clause, which means only if clients NAV crosses over the peak figure historically can we collect our performance fee for the year, this clause was also mentioned in the contract appendix (3) We committed to always stick together, never leaving our customers and ready to work-for-free to get back all of our clients’ lost money and also beat the market average in long-term.
Can I know and track stock details in Golden River portfolio?
We are sorry that public individuals and even our clients cannot see the portfolio details for us to protect our business intellectual property as well as competitive advantage of Golden River. In spite of that, we can completely explain briefly which industries we are currently investing, direction in the future and even individual stocks verbally via phone call or direct meeting if investors are concerned. However, we won’t be able to provide in details by document % of each position to avoid followers buying force, which will push the stock acquisition price higher, which in turns will lower our returns since we focus on mid-cap stocks with only medium liquidity level.
If so, how do I know if my money is used appropriately like initial purpose?
We cannot use clients’ money for other purposes because at the end of every financial year, the independent auditor will complete their audit report based on confirmed data including: (1) Stamped documents confirming stock portfolio and cash balances by brokerage firms (2) Stamped documents confirming cash inflows/outflows of Golden River by custodian banks, thus the risk of our misuse of clients’ capital is almost impossible. The profit for basis of performance fee is calculated by the formula of: (Ending balance – Beginning balance – Net cash inflows), you will see these figures in the independent audit report so we cannot do anything shady or different.
On top of that, if you find that we misuse the capital, you can always sue us for the non-compliance of the “investment restriction” article in the contract, which already laid out our areas of investment is only financial-related vehicles – not including forex, cryptocurrencies, real-estate or other unsuitable means.
Yes I was convinced already, but your company is located in HCMC, what if I am in other regions/countries, how to meet & sign contract?
Yes we are absolutely able to meet online through free tools like Zoom, Google Meet or Skype alike. During the digital transformation boost by Covid-19 pandemic, a lot of online/virtual meeting applications have been made to reduce geological gap, even if you are miles afar from Ho Chi Minh City. On the other hand, if you have already discussed and made investment decision, we can sign digitally using legal e-sign (https://lawkey.vn/chu-ky-so/). After that, we may continue with step 3, 4, 5 like the FAQ number 2 laid out above.
In some special situations for segregated managed account of large investors/institutions, we may be able to fly to your locations, present and sign contracts, or you may paid us a visit anytime when you happen to be at HCMC. Many hedge funds and mutual funds out there have been able to raise capital globally so we believe geological gap is not a major and unsolved problem…