Internet domains offer double digit returns
Investing in Internet domains can generate double digit annual performance. The only open-ended fund that provides exposure to this market is Domain Developers Fund (DDF), domiciled in the Cayman Islands and managed by Michael Marcovici and Alberto Sanz.
The fund has been investing in domains since 2009. Over the last couple of years, its annual returns have been 21.57% and 16.37%, respectively. This year to end of June the fund is up 5.62% and targets a 15% return by the end of the year. June’s performance was particularly high at 2.29%.
The fund invests in both in existing and newly registered domains. Apart from established domain endings, such as .com or .de, the fund seeks to take advantage of markets with lower Internet penetration which offer high growth potential. The portfolio is diversified across domains and geographies, offering protection from market fluctuations.
Now is the perfect time to invest in domain names, according to the fund management team. As the internet develops, companies are spending increasingly more money on web advertising techniques such as search engine optimisation (SEO) to attract traffic to their websites.
The trend is evident worldwide—for example, India’s English-speaking population is the second largest in the world and the domain name market benefits from this development.
DDF is not the only fund on the market investing in the domain story, of course, but all others are closed to the public. The big names in the industry include Demand Media, NameMedia, Oversee and Domain Invest. Together they have raised more than $1bn in investments.
But DDF is the only one on the market open to both retail and institutional investors. It offers monthly liquidity and charges a management fee of 2% and an additional incentive fee of 20% for all earnings above 5%. The fund may be bought though most major banks and brokers, including UBS, Credit Suisse, Barclays and Citigroup.