Thanks to Paul for providing this link giving more details on the Galileo fund and details of the risks, fees and commissions:
This all sounds very clever, but other aspects of the fund aren't quite as reassuring. First, although the group is authorised by the UK Financial Services Authority, it's not regulated by it, so investors will have to rely on Gibraltar Financial Services Commission for protection.
"Investors should only consider this once they are fully aware of the protections they have as it is backed by the Gibraltan government. The total amount of compensation is below UK levels at the sterling equivalent of €20,000," warns Adrian Lowcock, from independent financial adviser (IFA) Bestinvest.
There is also the significant issue of whether investors are comfortable with putting their money in a fund that takes profits from gambling. As well as being high-risk – and, some would say, ethically dubious – the fund is also very expensive to run. It levies a management fee of 3 per cent per annum, a 30 per cent performance fee and stiff early-redemption penalties, starting at 5 per cent in the first year, then falling 1 per cent each year until it reaches zero.
The minimum initial investment of €100,000 (£90,000) is yet another major stumbling block for all but the wealthiest investors, and any additional investment must be the equivalent of at least €25,000.
I now know where they get the name from - the fees. They are astronomical.
Thanks also to Anonymous for providing this link to Centaur's football investment Maxnet fund. The chart looks less than impressive, with the value of an initial 10,000 being lower at the end of the year than after the first week of January!
Three analysts – Mr Sobey, Steve Walton and a third member of the Centaur team – study football form and filter their findings through a risk matrix which points them to either one or two weekly bets.
It is clear that this service is not cheap - in their own words:
In the following example for illustrative purposes MAXNET has recorded an annual profit of 50% i.e 10 points. Over the year there were 8 winning months totaling 16 points profit and 4 losing months losing 6 points leaving an annual profit of 10 points or 50% of bank.Mr Sobey said: “We make our profits by betting on football teams not to win. In a three-option contest (win, lose, draw) a lose or draw on the chosen team makes the subscriber profits. Our trades are chosen by myself and our analysts in the same way that stock market trades are chosen by stock analysts.” Last year, Maxnet analysts chose 37 games and correctly guessed the outcome of 32, giving their subscribers a growth on the year of 67%.
Client has a £10,000 bank.
A – Subscription model-scale fee of £1,995
B – Profit related model
Initial fee 2x £200 ie £400
Profit related payments over the year
16 pts x £500 per point (£10,000 bank has 20x 500 points) = £8,000
profit related fee at 25% = £2,000
Total fee =initial fee of £400 plus profit related fee of £2000 = £2,400
He said: “Investors are more and more becoming disillusioned with so-called safe investments that prove to not be so. We have seen our investor client base increase by over 300% in the last 11 months and the rise looks set to continue. And because Maxnet is based in the gambling market it is tax free.” He said some clients had already made 20% this year on their stakes.
Keith Sobey, the North East entrepreneur behind Centaur, said: “Currently there are hundreds of thousands of professional and amateur share traders worldwide.Looking at the results for MaxLay, which works on the same principles as Maxnet, but for rugby, golf, tennis, cricket and horse racing in 2008 (2009's are curiously unavailable) their results are pretty solid overall, although the fund went almost two months without a winner between September 12th and November 7th picking six consecutive losing bets. No doubt, many of us are looking at them thinking "I can do better than that".
“Sports markets provide a viable complementary alternative with better profit margins and increasing liquidity.
“Turnover on sports markets this year will exceed £10bn and this figure is likely to increase significantly in 2010 when European markets open soon. Should the USA and Far East follow in the next three years, turnover could approach £200bn.” Centaur started life in 2000 as a horse racing services firm and in 2005 moved into sports intelligence and investment funds, eventually building up a portfolio of £5m worth of client funds.
85 bets, 55 wins, and £10,000 turned into £12,252.24 in 12 months? Not bad, and I would probably be happy with that ROI on punts, but I would be disappointed if my trading profits were in that range.
Speaking of which, it's the end of the first quarter, and time for the Cassini Fund's Quarterly Report. Although I am up overall 10.49%, the first three months have been disappointing when compared with previous years. Highlights have been the NBA, NFL and the Academy Awards, with Snooker, F1, Rugby, Golf, Ice Hockey and Football all contributing a little. Big losses in the college basketball this month have been a setback and paying the Premium Charge every week bar the last two makes a direct comparison with previous years a little unfair. April and May are my worst, and next worst, months of the year historically, but I have some ideas for baseball this year which may help. Early season form - unpredictable. More in a future post.