Dynasty Wealth partners update, August 10, 2019

There has been a seismic shift for Dynasty Wealth (DW) due to two events which occurred since the end of July 2019.  The partnership is now positioning to produce and distribute a minimum of $5 million of cash, equivalent to $0.50 per unit, to the partners throughout the calendar year ending December 31, 2020.

When Dynasty Wealth was founded, the plan was to build a base of a million investors who would invest a minimum of $100 into startups, which the partnership had a stake in.  Given the new development the priority now is for Dynasty Wealth to be paid a minimum annual fee of 1%, payable monthly or quarterly on the assets under management (AUM) which it could easily have by the following dates:

  • $100 million by December 31, 2019
  • $500 million by June 2020
  • $1 billion by December 31, 2020
  • $5 billion by December 31, 2021
  • $10 billion by December 31, 2022

The two developments:

  • Introduction to a trust company which has 22,000 investors who have alternative investments of $3.5 billion on deposit with them.  The majority of the investors originated from the trust company’s registered investment advisor (RIA) clients.  Based on an RIA being limited to invest only 10% of their clients’ assets into alternative investments my projection is that the gross amount of the assets undermanagement (AUM) now managed by the trust company’s RIA clients is approximately $35 billion.

The trust company wants to leverage Dynasty Wealth’s brand and expertise to grow its RIA client base.  By October we will be speaking at the trust company’s RIA alternative investment conferences which are held throughout the US.        

  • President Trump levied 10% tariffs on an additional $300 billion of Chinese goods on August 1st.  The result is that stock market volatility has increased significantly and it will not abate.  The timetable for the next recession to begin has been since reduced by many Wall Street analysts.  Now that it’s much more difficult for RIAs to prevent losses in the future for their clients the RIAs they will flock to DW’s Bull & Bear Tracker (BBT).  From June 30, 2019, to August 5, 2019,  the BBT’s published signals to trade the S&P 500 produced a gain of 21.6% vs. a buy and hold decline of -3.29% for the S&P 500.  The volatility for the BBT signals is also much lower than the S&P 500.  See Bull & Bear Tracker Track Record report.

Dynasty Wealth can reach the 2020-2022 AUM goals by establishing relationships with the RIAs who attend the trust company’s conferences.  The RIAs will sub contract with DW for it to manage a good portion of their clients’ assets for the following reasons:

  • The Bull & Bear Tracker can produce a much higher return than the RIAs can and with much lower volatility.
  • With the stock market at an all-time high and the world economy slowing the RIAs need to have investments for their clients which go up when the market goes down.
  • By partnering with Dynasty Wealth the RIAs can attract more clients and increase their AUM.
  • The RIAs will be able to raise AUM fees from the standard 1% to 2%.

The biggest hurdle for DW will be to quickly ramp up its infrastructure to manage $100 million or more of AUM that will flow in from the first RIAs to be managed by end of 2019.  My prediction is that the following will happen by June 2020:

  • The RIAs who DW is managing assets for will provide the backlogs for the DW’s AUM goals of $5B in 2021 and $10B in 2022 to be met.  The first RIAs will start out by giving DW only a fraction of their clients’ assets to manage.  As the superior performance results come in the RIAs will exponentially increase the amount for DW to manage.
  • There will be a waiting list of RIAs who will want DW to assist to manage their AUM.
  • The amount of AUM which the RIAs will want DW to manage will be greater than $10B.

Assuming that the Bull & Bear Tracker can produce a minimum annualized return of 20% there will be additional cash flowing to the DW partnership from the following by end of 2020:

  • Minimum of $1 billion AUM projected for ChoiceTrade’s international micro-investing app.  Since DW would receive 7% of a app users’ profits fee the potential income to the partnership could be annualizing at $17 million.
  • DW proprietary hedge fund with $1 billion of AUM funded by RIAs.  DW’s net including the 1% management fee and a 10% of the profits fee is projected to be an annualized $21 million by end of 2020.

The bottom line is the additional overhead needed for DW to grow from $100M to $10B of AUM will be miniscule.  DW will also have no customer acquisition or advertising costs.  My projected cash distributions per a DW unit, which was most recently priced for $1.00, could potentially be as follows:

  • $0.50 for 2020
  • $4.00 for 2021
  • $12.00 for 2022

The even better news is that Dynasty Wealth can have its cake and eat it too.  DW will have the discretion to invest a minimum of 10% of the AUM it co-manages into startups.  DW’s original business model, wherein it would obtain a 5% stake in the world’s top startups for providing them capital, has been preserved.  Instead of having to first build a base of one million investors to each invest $100 in startups, it will have $100 million of discretionary capital for startups by the end of 2020.  My prediction is that additional cash distributions from capital gains in the coming decade will be significant.

Finally, should the fourth quarter of 2019, be a repeat of the market volatility for the fourth quarter of 2018, the timetable for the first $1 billion of AUM to flow in for DW to manage would reduce significantly.  The Bull & Bear Tracker thrives on market volatility.  Read the Bull & Bear Tracker Track Record report.