-RapFlag is a one-stop-shop for the investor. You don’t need to open 10-20 investment accounts, fund them initially by making 10-20 wire transfers, deploy the capital initially on each platform, and periodically rebalance the asset allocation.
-Some platforms have a rather manually demanding process to deploy the capital into a sufficiently large number of their loan assets and a few days of work are required to deploy the capital initially, then a few hours per week to keep all cash reinvested while making sure the allocation is balanced.
Expertise and Know-How
-The Investment Manager has gone through extreme lengths to obtain his education and professional experience. It requires a trained eye to be able to ascertain which assets are worthwhile, wherein admittedly even the Investment Manager’s opinion is, just like anything in investments, an opinion.
-The Investment Manager, with the assistance of his staff, has review a comprehensive list of over 2500 online investment platforms and has identified a subset he believes are well worth the Fund’s capital commitment.
Technological Accounting Solution
The Investment Manager has programmed several simple scripts to automatically pull the valuation of the assets booked on each platform.
-Some platforms impose a minimum investment per asset, e.g., $1k minimum investment per Real Estate Bridge Loan slice in the US, as a way to ensure only Accredited Investors participate. For Real Estate Equity investment the minimums are even higher at $10-25k per asset.
-The advantages to size in allowing a highly diversified asset base are an important source of value added since no other Fund offers exposure to hardly any of these assets, and certainly not to all of them at the same time.
-Not everyone can invest on every platform directly in his personal capacity. For example, the US platforms do not generally accept non-U.S. investors.
-The Fund is set-up such that it can invest in almost any platform it so wishes, either directly or via a wholly owned subsidiary. The income flows tax-free through the Subsidiaries, relying on the Portfolio Interest Exemption Rule in the U.S (U.S. Code § 871), up to the Parent so as to avoid a double taxation and a tax leak.
Preferential Institutional Terms
-The Investment Manager is aggressively negotiating with the Online Lending Platforms for a reimbursement (or a “kickback”), of a portion of the fees the platform would usually have kept to itself. Several such agreements have been executed for a meaningful reimbursement, which is passed in full to the Fund’s investors.
-For example, the Investment Manager’s preferred broker for Personal Unsecured lending in Europe is reimbursing the Fund a one-time 5% (of principal) fee, out of a 6% fee it usually would keep to itself. This is in addition to what ever net return is realized on the loans.
-Another example, borrowers on Real Estate Bridge Lending platforms often offer an additional 0.5-1.0% interest to investors committing at least $10k to that loan asset.
-As the Fund grows, the Investment Manager will obtain more and better terms for the Fund’s capital.
-The advantage to size is significant in Crowdfunding Assets, since it is a market in its early stages of being opened up to the general investment public.
Margin Lending Automation
-The Investment Manager has found it beneficial to program a simple algorithm – continuously running on a server – to optimize the interest rate at which Lending Offers are renewed so as to guarantee that the Fund’s capital is always lent out at the highest possible interest rate.
-This applies to the Bitcoin Exchanges via which the Fund supplies its capital to traders who wish to place leveraged bets in cryptocurrencies.
-Read more about this in the Margin Loans (capital provision) section of this presentation.
-RapFlag’s OpenSource project to automate the RapFlag Fund’s NAV calculation has been recognized by Bitfinex, the largest Cryptocurrency Exchange in the world: http://docs.bitfinex.com/docs/open-source-libraries
-As Bitfinex does not report to its clients their aggregate Account Value in USD, we have programmed a little script that pulls this data from the Bitfinex API and calculates the daily Account Value and the daily Income for the Fund’s account with Bitfinex: https://github.com/zdavatz/rapflag