Investing money with a celebrity factor – The funds from Thelen, Maschmeyer and Diekmann

Fund products from well-known personalities attract attention – but does that make them a good choice? Three celebrity funds under the microscope.

As a public figure, you have many opportunities to monetize your fame. For example, you can write a book or launch your own reality show. Or you can simply set up your own investment fund. 

The latter seems to be becoming more and more fashionable: In addition to former Bild boss Kai Diekmann and entrepreneur Carsten Maschmeyer, who once built up the financial sales company AWD, former “Den Lions’ Den” juror Frank Thelen has now also launched his own fund for private investors, which he is promoting in the media. 

A well-known name attracts investors – but that doesn’t necessarily mean that the financial products keep their promises. The German crash prophets and book authors Max Otte, Dirk Müller and the duo Friedrich and Weik have been proving this for years. In the past, the funds they launched themselves have brought investors at best sobering increases in value, not infrequently losses, but in any case high costs. Very few actively managed celebrity funds are broadly diversified, often investing in only a double-digit number of stocks. For investors, this means a high concentration risk. And the products from Thelen, Maschmeyer and Diekmann are no exception. We have looked at the funds in detail. 

Blockchain, AI and Software: Frank Thelen’s 10xDNA

10xDNA Disruptive Technologies is the name of the new investment vehicle of serial founder and investor Frank Thelen. The TV personality’s fund was officially launched at the beginning of September and its name is based on Thelen’s recently published book: In “10xDNA: The Mindset of the Future”, the serial founder expresses his enthusiasm for technologies such as artificial intelligence, 3D printing, blockchain, flying taxis and self-driving cars. His publicly accessible fund now wants to invest in some of these sectors in the form of shares.

Thelen’s goal is quite ambitious: According to a report in Handelsblatt, the entrepreneur envisions a 300% increase in value over the next four to eight years. At least he himself seems convinced of this: he has invested “a large part” of his liquid assets in the 10xDNA fund, as he announced in an OMR podcast. There he also said: “You can only beat an index if you understand something that others don’t understand.” Thelen, who himself gambled away his money on Wirecard shares last year, advises the fund – but a team of physicists, biologists, crypto experts and capital market analysts is primarily responsible for finding out which securities the investors’ money flows into.

What’s inside?

The fund’s website does not yet provide any specific information on positions; the portfolio is still being built up, it says. It only talks about “disruptive tech startups”, “new markets” and “relatively few stocks”. According to media reports, the fund is said to contain almost 30 stocks, including technology stocks such as Tesla, Palantir and Tencent. So no stocks that cannot already be found in global ETFs such as the MSCI World Index or the Nasdaq. The fund also wants to invest in the cryptocurrencies Bitcoin and Ether. It is not impossible that investments will be made in a non-listed company that has yet to complete its IPO. Up to 10% of the fund’s volume could also flow into illiquid stocks such as companies in pre-IPO situations, the website says. 

How much does the fund cost?

Private investors pay 1.8% in ongoing management costs per year, which is four times as much as for an ETF. For institutional investors, it is 1.5%. Depending on how much capital is invested in one go, the fees are reduced: from €100,000, only 1.6% per year is deducted for management, and from one million euros, it is 1.39%. Large investors can reduce the ongoing fees even further, but in return a performance fee is due. In plain language, this means: if the fund generates a return in one year that is at least 7% higher than in one of the previous five years, the fund retains an additional 15% in compensation on the profits achieved above this. You can find out how the costs of actively managed funds affect your final assets using our calculator .

How is the fund doing so far?

Since its launch on September 1, the 10xDNA fund has lost value. To be fair, it is not possible to make a serious performance assessment after just three weeks.

The fund’s sales prospectus does not specify a benchmark with which later performance could be compared. “The sole aim is long-term growth,” it says. For comparison purposes, however, the fund is based on “established technology indices.” The information sheet does not reveal which ones are meant by this.

Disruption or not: Even if some of the tech stocks that Thelen’s fund wants to include have been doing well recently, that doesn’t have to continue. The same applies as for all other individual stocks: things can go downhill at any time. And with just 30 stocks or less that the fund will contain, investors are taking on a high concentration risk. This is exacerbated by the fact that Thelen also wants to invest in companies that have gone public through SPACs, i.e. practically through the back door. In short, SPACs are empty takeover companies that go public and then merge with another company, which is then hoisted onto the stock exchange and saves itself the bureaucracy of a conventional IPO. The whole thing is very controversial, as many SPAC deals have already meant high losses for investors.

The Paladin One from Maschmeyer

“More knowledge. More security”. This is the motto of the Paladin One funds from Maschmeyer. The variant for private investors was launched in March 2018 by the fund company of the same name, Paladin One Asset Management, which emerged from the Maschmeyer family office. The fund has been available for institutional investors in an identical composition since 2013. Paladin One is managed by Carsten Maschmeyer’s son Marcel, among others. The self-declared goal is a claim that is often heard in the fund industry: to track down undervalued stocks and thereby achieve a long-term return of an average of 10% per year. This should also be achieved with the help of specialists and analysts who say they spend several weeks examining the business model, balance sheets, company history and profit forecasts. In short: with active management consisting of a fund manager and a team of experts, just like any other active fund.

What’s inside?

Around 15% of Paladin One consists of cash reserves (liquidity). 85% are stocks, and only 15 to a maximum of 25 positions. The fact sheet does not go into more detail than that. As far as stocks are concerned, the fund focuses on European companies. 75% of the stocks included belong to German companies, and US companies are not included at all. The top 10 positions include companies such as the wind farm and solar system manufacturer Blue Elephant Energy, the pharmaceutical company Medios and Aareal BK – providers of banking and digital solutions, smart financing solutions and software, among others. Social Chain AG, a social media company that relies on the marketing of products with the help of influencers and in which Maschmeyer’s former Lions’ Den colleague Georg Kofler is already a major investor, has a weight of around 5%. 

How much does the fund cost?

The management fees are the same as those for Frank Thelen’s 10xDNA fund: private investors pay 1.8% fees per year, institutional investors 1.5%. The Paladin One fund also charges a performance fee of 12.5%. And there are probably few years in which it is not due. Every year in which the fund’s value develops positively and at the same time reaches a new high (and thus exceeds the so-called high water mark), the performance fee must be paid – regardless of how high the increase in value is. The 12.5% ​​is then deducted from the actual excess value, i.e. from the profits with which the fund exceeded the last high.

How has the fund performed so far?

The Paladin One fund for private investors, launched in 2018, has not been on the market for very long. The variant for large investors, which has been around since 2013, is at least somewhat more serious: the fund has achieved a return of 132% after costs over the past eight years, which corresponds to an average annual return of 16.5%. This means that the Maschmeyer fund has actually performed slightly better than the global MSCI ACWI index, which achieved 14.1% per year over the same period. In this case, too, this is not a sign of a promising future. On the contrary: there is a probability that the fund will not maintain its good performance in the long term. 

Planning for the future with Kai Diekmann?

“The wild things are back,” was the headline in Manager Magazin in 2017, announcing the fund plans of former Bild editor-in-chief Kai Diekmann and his former school friend Leonhard Fischer, a former member of the board of directors at Dresdner Bank. The mixed fund the two have set up is called “Zukunftsfonds” and private investors have been able to invest in it for four years. Not too many investors have been enthusiastic about the former tabloid journalist’s product: so far, the Zukunftsfonds has less than 27 million euros in fund volume. By comparison, some ETFs on the MSCI World have a fund volume of 36 billion euros or more.

What’s inside?

Luring Germans away from savings accounts and slowly familiarizing them with the capital market – that was Diekmann and Fischer’s self-declared goal. And indeed, the future fund invests very carefully: more than half of the capital flows into cash (56%), so it is not exposed to any fluctuations. The remaining 64% flows into a fairly colorful potpourri of stocks, a clean energy ETF, emerging market and corporate bonds, gold ETCs, index certificates on Bitcoin and “alternative investments” such as wood. Just 25 individual stocks were in the fund in spring 2021, including companies such as Bayer, EON, BASF, Panasonic, Nel Asa and the gold mining company Barrick Gold.

How much does the fund cost?

With a total expense ratio (TER) of 0.96%, the future fund is slightly cheaper than most actively managed funds.

Return

Since its launch in November 2017, the future fund has achieved a return of around 10%, or an average annual increase of 2.5%. That is far less than investors could achieve with a passive index fund: an ETF on the MSCI World, for example, achieved a return of around 12.5% ​​between 2017 and 2021. At least: Diekmann’s fund has achieved its self-imposed target of “2-4% annual return”. With 5% volatility per year, the fluctuations in value should have been bearable for investors. For comparison: the MSCI World Index has a volatility of around 12%. The low fluctuations in value are not surprising, as more than 50% of the capital flows into cash. This distribution of security and risky investments is also nothing that you as a private investor could not create yourself. You could just as well invest half of your money in risk-free investments, for example in a current or fixed-term deposit account, and thus reduce the fluctuations in your portfolio. You don’t need an actively managed fund, which still costs far more than most passive ETFs.

Whether known or unknown: Active funds are rarely worthwhile

It is nothing new that the media world pays attention when investment experts, former bank executives, media moguls or simply entrepreneurs give investment tips or launch their own funds. Just think of star investor Cathie Woods, who has now launched six funds and whose stock market trading is followed by the public at every step and sometimes copied. Or star investor Michael Burry, who has served as a leading figure for countless private investors since the film “The Big Short” at the latest. Tesla boss Elon Musk now only has to post a photo of his dog to set off a price explosion on the crypto market.

How the products of start-up investors such as Frank Thelen, Carsten Maschmeyer and Kai Diekmann will develop in the long term remains to be seen. In general, however, the same applies as for actively managed investment funds from unknown fund managers: in the long term, very few specialists and experts manage to generate higher returns than global indices. The rating agency Standard and Poors (S&P) has repeatedly found this in its analyses, in which it compares the returns of active funds with their corresponding benchmarks. The result is the same every year: only a fraction of active funds manage to generate higher returns than an existing index in the long term. According to the most recent evaluation, in ten consecutive years only 5% managed to outperform. And this minority is rarely made up of well-known personalities. The main reason for such a remarkably poor balance sheet is usually the costs. In addition to ongoing management costs of 1.5% per year or more, performance-related performance fees are often also incurred. Such costs have a negative impact on performance. In some cases, there are also issuing surcharges. For comparison: the ongoing fees for ETFs are between 0.1% and 0.5% per year.

It goes without saying that even one or two celebrity funds will occasionally manage to be better than the broader market after costs. But this has less to do with the analytical skills and experience of the dedicated specialists and is mainly due to pure chance. But to be successful on the stock market over decades, you don’t need chance, nor market timing or stock picking. All you need is a passive investment strategy with ETFs that spread your capital across many different stocks instead of investing it in just a few dozen stocks. That may feel less glamorous, but it brings better returns in the long term.

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