Disruptive Investing

Figure 1 (click to enlarge) Now, we have defined mutual funds as digital assets that can be distributed thru a virtual network, from source where the value is created and managed, to the retail investors where payment of fees is made (plus information about self is granted) in exchange for that created / perceived value, via the wholesalers, distributors, financial advisors and institutional investing networks. But not all is simple, mutual fund managers must navigate a stormy sea of: • Redemptions (clients departing) • Performance (NAV decreasing, Cap gains & Dividends decreasing) • Risk (volatility increasing) • Asset Allocation (what’s the right mix?) • Modeling (efficient frontier “what ifs”) • Competition (perception of better & best) • Disintermediation / Transparency? • Reputation (least worst performing?) • Future? - How will they perform relative to their peers and other assets such as Hedge Funds and ETFs (Exchange Traded Funds)? – Independent scoring of “Diversificat...

• Mutual Fund (simplified) – A particular collection of financial instruments controlled and created by a manager with fiduciary responsibilities to buyers (it is a list, a virtual asset of virtual assets) Characteristics of this List: • Stocks and / or Bonds and / or Cash (limited to some particular blend) • Focused on particular ‘sector’ (industries and sub-industries) • Controlled by geographic boundaries (regions, countries, continents) • Limited by charter to particular ‘styles’ (think style boxes) • Restrained in types of trades and % Cash (usually no derivatives, shorting, options) • In exchange for the manager (cost overhead), Buyers expect – Preservation and Growth of their capital (above averages) – Returns in the forms of dividends, capital gains distributions, … – Steady, smooth NAV, no surprises, low volatility – Salability / liquidity •Value is “created” by the superimposition of the collective performance of the individual virtual assets as a grouping (lis...