My Thoughts on the Kim Kardashian Fund
I am fascinated by Kim Kardashian.
Did you know she started out as a wardrobe stylist for Paris Hilton?
It’s true.
Yet what’s even more impressive is that she basically stole Paris’s playbook:
She was in a porno, got famous … and then parlayed her fame into a business empire.
The success of her clothing business, Skims, and her cosmetics line, KKW Beauty, have turned Kim into a self-made billionaire, worth a staggering $2.6 billion, according to Forbes.
And now Kim is launching … an investment fund.
I feel like a 16-year-old fanboi scrolling on Insta:
OMG! OMG! OMG!
Yet, instead of buying stocks on the share market, Kim’s firm plans to buy private businesses.
These are called ‘private equity’ funds (as opposed to buying shares on the stock exchange).
Here’s the investment pitch:
A promising fashion label gets an offer from Kim to buy their business. Then Kim wears their clothes and posts the pics to her 328 million Instagram followers, creating an instant hit. And a few years after that she’ll flick the company off for a huge profit.
SHUT UP AND TAKE MY MONEY, KIM!
Hang on. In reality, that bounty will go to Kim’s booty, and not the investors in her fund.
If history is a guide, her investors will likely earn below average returns because of the high fees funds like hers charge. And it makes sense: there is only one Kim Kardashian, and she doesn’t need your money.
So let’s talk about people who do need your money.
Your super is much more likely run by a bunch of middle-aged men … with 74 people following their LinkedIn profile. Just like Kim, they’re hunting for private deals, though unlike Kim it’s arguable whether they can add any value to their investments. Yet they sure have fun doing it. And they pay themselves really well. But their results are often like Kim’s 2012 song ‘Jam (Turn It Up)’, which is a truly awful piece of autotune.
Case in point, one of the world’s biggest super funds, CALPERS (the California Public Employees’ Retirement System) just took a multibillion-dollar bath on their private equity investments … which proves that even the biggest boys in the finance sandpit don’t always get it right.
And that is why I don’t invest in industry super funds that have private unlisted investments. After all, many have tried and failed to keep up with the Kardashians.
Tread Your Own Path!