Frequently Asked Questions
The Founder’s Portfolio strategy is a simple one – To invest in great companies, preferably those listed at stock exchanges, with a market capitalization ranging between USD1 Billion and USD 30 Billion. We specifically look for companies run by their founder members that show growth between 15% – 50%, or higher year-on-year.
The objective of the Founder’s Portfolio is to compound the investor’s money at double-digit rates year-on-year. Simple, back-of-the-envelope calculations will tell you that a 10% gain each year when compounded, gives a doubling of the initial corpus in 7.2 years. This in case no further investments are made, and with the assumption of a flat 10% growth per year. In reality, the growth is dependent on several factors, which we plan carefully for.
We do not believe in chasing companies and founders who have received much attention and press but look for growth-oriented organizations that have solid fundamentals. While the process of identifying a company is intensive and based on an exhaustive checklist, our top parameters are:
- A minimum of 10 years in operation as a company
- Low debt-to-equity or cash ratio
- Widening economic moat, or a sustainable competitive advantage that protects the market share from aggressive competitors
- The company operates in a duopoly or monopoly market
- A sales growth CAGR of 15%+ in the last 5-10 years
- The day-to-day operations are still managed by the company’s founders
At Client First Capital, we are conservative, risk averse investors. We strictly monitor the allocation of a stock in the strategy and avoid more than 30% allocation in one company at the investment stage. Generally, the initial investment in one company will not exceed more than 10%, with very few exceptions. This is to ensure that each investor’s exposure is well diversified amongst sectors and companies. However, only investors who understand Equity should invest in it, knowing that there is no capital guarantee in equity investments.
We offer transparency and complete control to each investor over their funds, always. We offer the benefits of a portfolio strategy and individual control over funds through the use of segregated accounts. Each investor’s money is managed in her or his personal account with the broker (IBKR). At no point in time can the money be transferred to Client First Wealth Management Private Ltd. or Client First Capital Ltd.
You can withdraw your funds in whole or part, at any time should you need the same. We trust you will use your discretion and consult your Fund Manager before making any withdrawals so that you do not lose your hard-earned money.
We believe that our investors are like our limited partners, and we take onus of the responsibility of growing their wealth. In this spirit, we have ensured that there is no lock-in period applicable, and no exit load applied as well regarding the investments in the Founder’s Portfolio. However, to achieve long-term financial goals by building a portfolio with significant returns, it is advisable to have patience and remain invested as per the time horizon advised by your fund manager.
It is right on your part to ask about the past performance of the fund manager. This is exactly how we look at the past performance of our target companies and their management, so that we are sure of our investment. In fact, we would be upset if you did not ask this question, as it would show a lack of due diligence on your part in managing your investments. The past performance of the fund manager is a consistent 9%-10% growth on a compounded basis in debt instruments for the last 5 years. Additionally, you should look at the performance of the Founder’s Portfolio – please see the next question and answer for the same.
We have seen exceptional success in implementing the strategy behind the Founder’s Portfolio. The fund’s performance in 2019 & 2020 showed annualized gross returns of 30%, and 42% respectively. The year-to-date returns as on May 22, 2021, are at 22% gross. Our strategy has yielded better growth than comparable indices despite the climate of uncertainty and under-performance brought on by the ongoing pandemic. However, as a word of caution to fellow investors, we advise that one should only see the 5-year returns to judge the performance of any strategy. Also do note, that the past performance is not the indicator of the future.
Can I do systematic investment, or do I have to invest lump-sum in the Founder's Portfolio strategy?
As on date, both options are available to you, subject to the discretion of the fund manager. The fund manager can close intake into the strategy whenever he/she finds it appropriate to do so, therefore it is important that you make an investment at the earliest else you might lose the opportunity to grow your funds.
As on date the minimum investment amount for the segregated portfolio is USD 250,000. We advise that you plan the investment in consultation with the fund manager. This will allow you to look at the various possibilities and the timing of the investment basis your ability to access the funds.
While the Founder’s Portfolio is not registered with any regulatory body, as part of our corporate governance, we will conduct an impartial audit through a registered third-party auditor at the strategy level. However, please do not that the fund manager / advisor is registered with FSC Mauritius.
To understand the applicable charges at any specific point in time, it is best to discuss the same with your fund manager.
There is no correct answer to this question as it is dependent on the financial goals and milestones that need to be met by the investor. Needless to say, the more you invest, the greater the sum achieved at the end of the period. Please contact your relationship manager for further clarity – We suggest you get a goal tracker and KYC done with us.
One of the reasons we decided to work with IBKR, one of the leading online brokerage portals, is the seamless experience delivered across mobile and the Internet. You will be able to keep a minute-by-minute track of your investments and gauge success basis the user-friendly reports and presentation of data. As an investor, you will be able to check the status of the investments as and when you wish on your mobile device through the IBKR application, and the Internet, if you prefer a larger screen. While we will share periodic updates on your portfolio, we believe that it is imperative that you keep a regular watch so that you are able to keep an eye too.
Each of us have different financial goals to meet over the coming years and decades. An investor with the objective of making double-digit returns through investment in stocks, those who desire long term wealth creation, and understand equity investments, power of compounding, and Warren Buffett’s and Peter Lynch’s ideology would be the right kind of people we would be happy to work with. However, the journey is long and is full of learning – We are there to partner you in the process and are happy to answer questions or clarify a point of view at any time.
Under the Federal and Mauritius Law, it is a crime to offer any sort of guarantees in equity investments. Please do keep in mind that anyone offering a guaranteed return on equity or other forms of investments will not be telling the truth and should not be trusted with your hard-earned money.
We understand the strategy and implementation behind the Founder’s Portfolio – that is our area of expertise. However, we are not tax experts and are therefore not allowed to give any tax related consultation. We would request that you consult a certified tax consultant for any specific queries related to the tax implications of your investments.