The Gotrocks Fund
Today Zhao Zhen and I met again talking about Covavest. Now we have determined to pursue a focus approach to the investment web site. We will focus on the risk-adjusted investment strategy as the general guidance to Covavest. Three divisions of work should be concentrated over the next few months.
Local marketing will be concentrated on the local general investors such as the local Chinese communities, local associations, and local media. Special presentation materials should be developed to address the needs of the general investors. The goal is to educate the risk-adjusted investment methodology to the general investors.
The Internet media will be concentrated around using the new web technologies. Several successful stories like Wikipedia, Flicker, Delicious, & Digg should be our examples in this effort. The functionalities of these web sites should be utilized to have a rich user experience.
Got Rocks Mutual fund is our third concentration. Since we have to start from somewhere anyway, we should start our least resistance first. Currently we think the local marketing efforts and the Internet marketing should our paramount tasks for us now.
History of Risk-Adjusted Investments
We reviewed the risk-adjusted investment history. The first idea is the total return mutual funds. Sometimes they are called balanced funds or hybrid funds. These funds usually invest in stocks and bonds with relatively flexible investment strategies. They can adjust the relative weights of stocks and bonds. There are several total return closed-end funds. Three examples are listed below for references.
Zweig Total Return fund seeks high total return over full-market cycles by investing primarily in high quality bonds and to a lesser degree stocks. The fund will normally invest between 50% and 65% of its total assets in the highest quality fixed-income securities and between 25% and 35% in equity securities. Our objective is to participate solidly in rising stock and bond markets and protect the bulk of those gains in declining markets.
Boulder Total Return Fund seeks to produce both long-term capital appreciation through investment in common stocks and high current income consistent with preservation of capital through investments in income producing securities. For long-term capital appreciation the Company typically will invest in U.S. companies that have a proven track record of earnings and the prospect of increased future value through growth in revenues and profits. It anticipates a low turnover rate in its portfolio. Because the Fund is leveraged the Company invests in income producing securities such as REITs and other registered closed-end income funds "RICS" such as bond funds as well as other income producing securities.
Another example is the Vanguard Asset Allocation Fund. This fund allocates its assets among stocks, bonds, and money market instruments in proportions consistent with the fund advisor’s evaluation of their expected returns and risks. The proportions are changed from time to time as return expectations shift. The fund may invest up to 100% of its assets in any one of these three asset classes.
The second examples of the risk-adjusted return funds are the lifestyle mutual funds. These mutual funds are usually divided from most aggressive ones to very conservative ones. Vanguard has four life-strategy funds ranging from growth fund, to moderate growth fund, to conservative growth fund, and income funds. Fidelity calls this type of funds as Asset Manager Funds. These funds usually fixed ratios among stocks and bonds.
The most recent development in the risk-adjusted funds is the lifecycle funds. Vanguard names these funds as target retirement funds. Each fund has different target retirement date. These dates are usually in five years intervals. Vanguard has funds ranging from 2005 to 2050 with five year intervals between them. Fidelity names these funds as Freedom Funds ranging from 2000 to 2050 with five year intervals between them.
Gotrocks Fund
There are two problems with the above mentioned risk-adjusted funds. In one side they include only limited classes of assets, usually stocks and bonds only. Another problem is that they have too many combinations for different investors. We believe that all investors should have the same optimal allocations among many asset classes. We call this kind of fund as the Gotrocks Fund.
In order to put this idea in practice, we have decided to do the following tasks first.
We need to establish a company. Zhao Zhen is going to find some documents related to starting a company.
We need a name for the company. We both need to think of great names for our company. Zhao Zhen believes that the company name and the web site need can be different.
Zhao Zhen will start research the web server technologies needed to develop a web site. I will start put together the basic investment methodology about the Gotrocks Fund.
Local marketing will be concentrated on the local general investors such as the local Chinese communities, local associations, and local media. Special presentation materials should be developed to address the needs of the general investors. The goal is to educate the risk-adjusted investment methodology to the general investors.
The Internet media will be concentrated around using the new web technologies. Several successful stories like Wikipedia, Flicker, Delicious, & Digg should be our examples in this effort. The functionalities of these web sites should be utilized to have a rich user experience.
Got Rocks Mutual fund is our third concentration. Since we have to start from somewhere anyway, we should start our least resistance first. Currently we think the local marketing efforts and the Internet marketing should our paramount tasks for us now.
History of Risk-Adjusted Investments
We reviewed the risk-adjusted investment history. The first idea is the total return mutual funds. Sometimes they are called balanced funds or hybrid funds. These funds usually invest in stocks and bonds with relatively flexible investment strategies. They can adjust the relative weights of stocks and bonds. There are several total return closed-end funds. Three examples are listed below for references.
Zweig Total Return fund seeks high total return over full-market cycles by investing primarily in high quality bonds and to a lesser degree stocks. The fund will normally invest between 50% and 65% of its total assets in the highest quality fixed-income securities and between 25% and 35% in equity securities. Our objective is to participate solidly in rising stock and bond markets and protect the bulk of those gains in declining markets.
Boulder Total Return Fund seeks to produce both long-term capital appreciation through investment in common stocks and high current income consistent with preservation of capital through investments in income producing securities. For long-term capital appreciation the Company typically will invest in U.S. companies that have a proven track record of earnings and the prospect of increased future value through growth in revenues and profits. It anticipates a low turnover rate in its portfolio. Because the Fund is leveraged the Company invests in income producing securities such as REITs and other registered closed-end income funds "RICS" such as bond funds as well as other income producing securities.
Another example is the Vanguard Asset Allocation Fund. This fund allocates its assets among stocks, bonds, and money market instruments in proportions consistent with the fund advisor’s evaluation of their expected returns and risks. The proportions are changed from time to time as return expectations shift. The fund may invest up to 100% of its assets in any one of these three asset classes.
The second examples of the risk-adjusted return funds are the lifestyle mutual funds. These mutual funds are usually divided from most aggressive ones to very conservative ones. Vanguard has four life-strategy funds ranging from growth fund, to moderate growth fund, to conservative growth fund, and income funds. Fidelity calls this type of funds as Asset Manager Funds. These funds usually fixed ratios among stocks and bonds.
The most recent development in the risk-adjusted funds is the lifecycle funds. Vanguard names these funds as target retirement funds. Each fund has different target retirement date. These dates are usually in five years intervals. Vanguard has funds ranging from 2005 to 2050 with five year intervals between them. Fidelity names these funds as Freedom Funds ranging from 2000 to 2050 with five year intervals between them.
Gotrocks Fund
There are two problems with the above mentioned risk-adjusted funds. In one side they include only limited classes of assets, usually stocks and bonds only. Another problem is that they have too many combinations for different investors. We believe that all investors should have the same optimal allocations among many asset classes. We call this kind of fund as the Gotrocks Fund.
In order to put this idea in practice, we have decided to do the following tasks first.
We need to establish a company. Zhao Zhen is going to find some documents related to starting a company.
We need a name for the company. We both need to think of great names for our company. Zhao Zhen believes that the company name and the web site need can be different.
Zhao Zhen will start research the web server technologies needed to develop a web site. I will start put together the basic investment methodology about the Gotrocks Fund.
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