Frequently Asked Questions
Achieving an “alpha” is the ultimate goal of every investor.
Alpha (α) is the excess return when comparing the return of an investment to the average overall return of the market. The stock market in Vietnam, whose overall return is calculated from VNIndex, has yielded an average return of 8% – 9% per year within the last 10 years. Coincidentally, this is also the average Return on Equity of most listed companies. Only less than 5% of listed companies can achieve a Return on Equity between 15% and 20% per year in the long term.
Achieving an “alpha” in investment is like having a business whose profit over equity capital is higher than the economy average. This requires serious and distinctive in-depth research from the team with many investment specialists. The Fund managed by AP Alpha has achieved an “alpha” of more than 100% within the last 5 years, which is a result of significant amount of time, effort and expenditures spent on the field to ensure investments such companies’ stocks are profitable, sustainable and safe. This is done by establishing solid relationships with the portfolio companies and conducting research on such companies’ key aspects, including but not limited to human resources, business operations and corporate cultures.
Potential investment in any stocks, bonds, saving deposits or real estate should be consulted based on the investor’s individual financial plan. Therefore, before initiating any partnership, AP Alpha always provides assistant to help the investor plan his or her overall financial picture.
Stocks are an appealing investment channel, however, the appealing aspects only apply when picking the correct companies to invest in. This explains why 95% of investors in the stock market are experiencing losses.
Holding period of a stock investment should be calculated in years, instead of days like the update frequency of the price board. According to the legendary growth investor Philip Fisher, once a great stock is picked, there is rarely any reason to sell it.
At AP Alpha, we encourage our investors to consider a minimum investment horizon of at least 3 years, or even 5 to 7 years for a much more substantial and sustainable rate of return. The longer the holding period, the safer and more effective the investment return will become.
Holding a stock is essentially owning a part of the invested company. Therefore, any potential risks could be mitigated in the long-term by closely monitoring the company’s business performance, similar to what an investor would do if he owns the whole company.
Rate of return of the US stock market within the last 100 years has been averaging 9% to 10% per year, which is much higher than that of the gold market – averaging only 4% to 5% per year. The Vietnam stock market has been yielding an average return of 8% to 9% per year over the last 10 years. The majority of stock investors expect to outperform the overall market return, however 95% fail to do so, according to statistical reports. Only a few investors could outperform the market in the long term by achieving an average return of 15% to 20% per year. Those who accomplish an average of 25% per year within 10 years of investment are considered exceptional.
Highly not recommended, unless your friend could propose a detailed plan with time to purchase, time to sell, purchasing and selling strategy and how to allocate such stock investment in your portfolio or your overall assets. Even in such case, you should spend a vast amount of time and effort to closely monitor every business operation of the company you invested in, while retaining a solid mentality against all volatilities from the market.
Stock investment is a profession that requires serious commitment of time, effort, skills and experience to achieve a substantial return in the long term. Being “advised” to invest in a particular stock is not a safe and strategic investment approach.
An individual investor’s biggest advantage against a professional Fund lies in his amount of cash ready to be utilized in the market. When the market is in a down trend, stocks are getting cheaper, which means the investor could purchase quality assets at a cheaper price. These times are always good opportunities to accumulate more quality stocks. During this period, depositing more cash into the Fund equals to owning more of the portfolio at a lower price and increasing the potential for higher long-term rate of return. AP Alpha recommends our investors to split up their capital to invest periodically every 3-6 months to take advantage of such opportunities.
As a confidentiality measures and to ensure the highest possible return for investors, AP Alpha will keep all portfolio details confidential to the public. However, we will frequently share our investment approach and key aspects of the companies we choose to invest in through the Quarterly reports and on our website. Performance reports are made available on our website and sent directly to each investor every month. Additionally, investors may contact their customer service personnel at AP Alpha to be informed about the Fund’s asset and performance at any time.
A guaranteed rate of return will be similar to a loan. Fixed-income investments such as bonds and savings deposit might be more appropriate to investors seeking a guaranteed rate of return.
AP Alpha seeks investors who are willing to partner with the Fund, rather than “traditional customers”. We believe that investing in the stock market together is the best way to utilize idle cash if an investor seeks to maximize his profit in the long term.
AP Alpha recommends a minimum investment horizon of 5 years, unless there is an urgency that requires immediate cash. Depending on the personal finance picture, investors should plan their withdrawal schedule accordingly.
Should any investor decide to withdraw their capital prematurely, AP Alpha commits to complete their withdrawal request within 10 working days. In such cases, investors will still be distributed their current investment return (if any) based on the terms set forth in the contract. However, premature withdrawals negatively impact the Fund’s investment plan and strategy, so there will be a small withdrawal fee applied in those cases.