Vision Capital Fund Frequently Asked Questions (FAQ)

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Your investment will be in "Vision Capital Fund" (UEN T24VC0100D-SF001), a segregated sub-fund of the Singapore-domiciled Umbrella Variable Capital Company (VCC), "VC Vision Capital VCC" (UEN: T24VC0100D). 

Eugene Ng is the Portfolio Manager of "Vision Capital Fund" and is employed by the investment management company, Galilee Investment Management Pte. Ltd. (UEN 201810646N).

Galilee Investment Management Pte. Ltd. operates as a Licensed Fund Management Company (LFMC) that is regulated by the Monetary Authority of Singapore (MAS), and has a Capital Markets Services (CMS) license (CMS101585).

From a regulatory standpoint, Vision Capital Fund can only accept accredited investors for now. That means we can only invest for individuals who meet any of the following three criteria:

1. Have net assets of at least SGD $2 million, of which only SGD $1 million can come from the primary residence

2. Have an annual income of at least SGD $300,000

3. Have net financial assets of at least SGD $1 million

We are also strictly looking for investors who:

1. Have patience and believe in the stock market's ability to generate long-term wealth

2. Can handle frequent stock market volatility (30-50%+ price declines) in a calm manner

3. Can invest capital that they don't need for at least five years

4. Believes that a company's long-term business growth will eventually drive most of its long-term stock price and returns.

5. Believes in Vision Capital Fund's mission, long-term investment strategy and philosophy.

We will invest Vision Capital Fund's capital only in publicly listed stocks. According to Jeremy Siegel's research in the 6th edition of his book "Stocks for the Long Run", over the past 220 years (1802-2021), stocks have significantly outperformed long-term bonds, short-term bills, gold, and inflation.

Vision Capital Fund's investment mandate is global, meaning we can invest in any stock globally from any country's stock market.

At Vision Capital Fund, we are committed to a long-term investment strategy. We aim to invest in the best stocks, believing they will follow their trend of business returns, appreciate over time and create generation-changing wealth.

Below are the constraints we have placed on Vision Capital Fund:

• Own up to 50 individual stock positions at any time
• No individual stock can exceed 25% of the fund's assets under management (AUM)
• Will not use leverage/margin in any form
• Will not engage in short-selling
• Will not hedge its exposure or use any form of currency hedging
• Will not use any derivatives (i.e. options, etc.)
• Will have no geographical or sector concentration limits
• Will cap annual net fund inflows at 10% when fund AUM exceeds US$25m 

In short, Vision Capital Fund is an investment fund that will invest only in stocks worldwide, with a long-term buy-and-hold approach. 

We are not convinced that we have a persistent advantage in market timing, hedging, FX movements, using leverage/margin, or derivatives. 

Thus, we want to avoid engaging in any of these activities, incur unnecessary costs, and take our time and attention away from what we should focus on and do the most: long-term investing in businesses.

It is nearly always a good time to invest in stocks if you have a long-term perspective (and we do!). 

According to the Credit Suisse Global Investment Returns Yearbook 2023, stocks from developed economies have returned 6.7% per year for over  100 years from 1900 to 2022, while stocks from emerging economies have gained 6.4% annually. Let's not forget that those 122 years included two world wars! 

If we run dry of investment ideas for Vision Capital Fund, we will not allow new subscriptions or top-ups, and if needed, we will return capital to investors.

We are long-term optimists on the stock market. There are 8.1 billion individuals on the world today, and most people will wake up every morning wanting to improve the world and their own lives. This drives the global economy and financial markets to keep growing, improving and becoming better.

The combined forces of human malice and nature's fury will periodically create havoc and test our resilience. But we have faith in humankind's collective positivity. If there is any mess, we believe the collective humanity can clean it up. To us, investing in stocks is ultimately the same as having faith in humankind's long-term positivity. We will be long-term optimists on stocks for as long as we continue to have this faith—the exception is when stocks have ridiculously high valuations.

Stocks are very risky if you:

1. Invest in companies you do not understand.
2. Invest with borrowed money.
3. Invest with money you know you need within a short time frame. 

Stocks are volatile and move up and down fiercely over short timeframes, sometimes without good reason. Price volatility is not risk to us; permanent or near-permanent loss of capital is; we describe how we mitigate investing risk in our Owner’s Manual.

All, if not most, of the biggest winners in the stock market will experience severe periods of significant price declines. Take Amazon.com, for example (as of 9 August 2024). The stock has returned over 1,700x from 1997 over 27 years, but it suffered more than 17x 20% price declines, 5X 50% price declines, and one greater than 90% decline during the dot-com bubble burst in 2001.

Stocks go down faster than they go up in the short term, but they go up more than they go down over the long term, which is the only term that counts. You need to be able to withstand price volatility; that is the price of admission you have to pay to be a long-term investor. Empower us as stewards of your capital to endure all of that for you.

There are no guarantees in the financial markets. We deal with ranges and probabilities. We cannot guarantee our investors any return. However, our target is an annualized net return of 15% p.a. after all fees or more for Vision Capital Fund's investors over the long run (5-7 years or longer).

We have to caution you here. The stock market is very volatile, and significant market declines are frequent and to be expected. We are very likely to experience even higher price volatility. When markets fall over shorter periods, we tend to fall more and faster than the market, but when markets rise over longer periods, we are more likely to increase by much more; this is how we think we will do over time.

That said, we believe in the stock market's long-term potential. Historically, stocks have been among the best asset classes for generating wealth. By finding the best compounders and investing in their stocks for the long run, we believe Vision Capital Fund can do very well for our investors in the years and decades ahead.

Based on experience and history, we think it is achievable, and we will be happy to tell you why. Remember, we are not going to borrow money to invest.

No, there is no hard lock-up for your capital. That means that you can withdraw your capital anytime every quarter. 

That said, investors who wish to withdraw their capital earlier will incur a minor early withdrawal penalty (3% of the withdrawn capital in the first year, 2% in the second year, and 1% in the third year). The penalty fee will go to Vision Capital Fund. We can waive the early withdrawal penalty on a case-by-case basis if needed.

The primary reason for implementing the early withdrawal penalty is to align our investors with our long-term investment strategy and to promote a long-term investing mindset. 

Moving your investments in and out of a fund can severely impact your returns. We want to avoid having our investors chase us, give us more capital when the fund is doing well and bail when the fund is doing poorly. Having a good fund manager is only one part of the puzzle; investors who stay invested with a good fund manager complete the puzzle. 

As such, only invest in Vision Capital Fund with money you do not need for at least five years. Vision Capital Fund will only be as strong as our investors, and we hope to be successful with like-minded ones.

Yes, you can. Vision Capital Fund can accept monthly subscriptions. The first subscription is subject to a minimum of USD 100,000. Subsequent subscriptions/top-ups are subject to a minimum of USD 20,000 without any charges.

New subscriptions are subject to a 10% legal fund cap on annual net inflows on Vision Capital Fund once the fund-wide AUM (assets under management) exceeds USD 25,000,000. This cap resets at the beginning of each year, and existing investors will always have priority on a first-come, first-served basis before the remaining balance is opened to new investors.

We intend for Vision Capital Fund to be nearly fully invested at all times, so it will be put to work when additional capital comes in. If we do run dry of investment ideas, we will not allow new subscriptions or top-ups, and if needed, we will return capital to investors.

No, we cannot. Our investors’ capital is held in Vision Capital Fund’s bank account with DBS (Development Bank of Singapore). 

The stocks that Vision Capital Fund will invest in will be via our broker and custodian, Interactive Brokers (IBKR).  A third-party independent fund administrator, NAV Fund Administration (NAV), will handle Vision Capital Fund’s investment returns calculations and investor subscriptions/redemptions. Baker Tilly will be the Vision Capital Fund's third-party independent auditor and corporate secretary.

When investors place capital with Vision Capital Fund, the capital will first go to the Vision Capital Fund’s DBS bank account. This bank account has two signatories-parties: (1) Vision Capital Fund’s signatory, Eugene Ng; and (2) NAV's senior executives.

Subsequently, the funds will be wired to Vision Capital Fund's USD account with IBKR, after which the buy and sell stocks transactions will be made. NAV will update investors on the value of their holdings in Vision Capital Fund. 

Any use of Vision Capital Fund’s capital requires both parties to sign off. When an investor redeems capital from Vision Capital Fund, the funds will be wired back to the same account in the investor's name.

Vision Capital Fund is managed by Galilee Investment Management Pte. Ltd, a Licensed Fund Management Company (LFMC) with the Monetary Authority of Singapore (MAS).

The portfolio manager, Eugene Ng, is registered as a licensed representative (licence number: NWC300012239) to engage in fund management activities with the Monetary Authority of Singapore (MAS).

We do not manage currency risks. We let currency movements take care of themselves. If a currency has a structural trend of long-term depreciation, we would have to seek businesses with higher local currency nominal growth rates to offset the currency depreciation and still provide a high enough USD-equivalent long-term return. 

We tend to avoid businesses operating in countries with very weak economic fundamentals, which are structurally prone to long-term currency depreciation or even frequent large one-off devaluations.

Vision Capital Fund's currency will be the USD. Despite our global mandate, we see the US publicly listed markets continuing to be one of the more attractive markets globally over the medium term, and they should account for the significant majority ~70-90%+ of the portfolio.

Thus, despite us being based out of Singapore and most of our early investors being Singaporeans, if the fund currency was in SGD, we had to do FX conversions from SGD to USD and have a long USDSGD FX exposure which we have no expertise in perfectly timing our FX hedges. In addition, FX volatility makes it difficult to report and compare in USD. Thus our decision on USD as the fund's currency denomination.

Despite having over 14 years of doing FX professionally from my previous three jobs at Citi, JPM and ADM, we have no expertise in being able to time any FX hedges perfectly and we do not want this futile effort to detract us from what we do best, to find great growing companies to invest in.

First, as the founder of Vision Capital Fund, I will invest a significant majority of my liquid investible net worth in the Fund. My wife and I will be among the largest investors in the Fund together.

Second, we incurred all initial one-time setup costs separately for Vision Capital Fund, which will not be charged to the Fund's investors and will not affect future returns.

Third, we will pay the same management fees as all our investors, which decline as the Fund's assets under management (AUM) grow. Under the fee model, most of our remuneration will come from Vision Capital Fund's performance fees. In addition, The performance fee will only (1) kick in if Vision Capital Fund can generate a compound annual return of at least 6% for our Fund's investors and (2) be charged only on the excess return over this 6% hurdle.

Fourth, Vision Capital Fund has no sales charges,  subscription fees, or redemption fees. In other words, we earn only from the Fund’s management fee and performance fee, with the bulk of our remuneration designed to come from the  performance fee.

The worst-case scenario is Vision Capital Fund’s value falling to zero, which could happen if the world comes to an end.

It is theoretically possible that all the companies in Vision Capital Funds can go bankrupt. But is it probable? No, it is not. Most, if not all, of the companies that we will typically invest in are typically growing, very profitable, have strong balance sheets, and are generally net cash.

The worst thing that can happen to an investor is if they invest with a short-term mindset, trying to jump in and out of the market. They miss the best days and end up with much poorer returns.  

Compounding requires time to work. All compounding is returns to the power of time, but time is the exponent. It is time in the market, not timing the market. Give yourself and us the time to let compounding work for you.

You will get an official quarterly report from Vision Capital Fund's fund administrator, NAV Fund Administration, which will show you the total amount of your investment in terms of the number of units and the net asset value (NAV) per unit. 

In addition, we will provide you access to the NAV Fund Administration's web portal, where you can check the value of your holdings, which are updated monthly.

As the portfolio manager of Vision Capital Fund, we intend to provide the following on Vision Capital Fund's website that are available to the general public:

1. A quarterly investor's letter which includes updates on the value/performance of Vision Capital Fund and commentary on how we build and maintain the portfolio
2. Bi-weekly investing-related articles 

Separately, we will provide all our investors limited access only to Vision Capital Fund's website:

1. All of Vision Capital Fund's holdings
2. Our investment thesis for the fund's holdings

In addition, we will organize an in-person investor annual meeting in Singapore at the beginning of every year, and we hope you can attend.

In our communications, we will generally avoid commentary on politics, the economy, and the stock market. While these topics matter, they distract investors from the key drivers of Vision Capital Fund's performance: the long-run business performance of the companies where it owns shares. 

We avoid doing so because we cannot forecast these things accurately, and we don't think anyone can precisely and consistently forecast well. Our communications will focus mainly on the business developments of the companies the fund owns.

And to be clear, we will not reveal Vision Capital Fund's trades before they are executed.