Investors looking to accumulate material wealth over time have been well served by taking an ownership stake in the world's top companies -- in other words, by claiming a share of the economy's growth.
History confirms what we say -- from exhaustive Ibbotson Associates studies using 80-plus years of data, to The Motley Fool's own in-the-trenches experience working directly with community members like you.
When you account for dividends, U.S. stocks, as represented by the S&P 500, have returned on the order of 9.5% per year since 1970 -- a rate of return that would typically double your wealth every 7.5 or so years.
And although past performance doesn't guarantee that common stocks will always perform well, or that any particular investor or mutual fund manager will keep pace with the broader market, 9.5% per year is the long-term historical average.
We think you have a right to strive for that much -- and more. That's why we don't recommend that you put your money in "the market" or risk your life savings by chasing hot tips, much less the latest Wall Street fad.
The reason is simple: Having searched long and hard, our friends at The Motley Fool believe that they've identified a strategy that will outperform the broader market over the long term.
And that strategy is simply identifying the world's best companies, and then buying them at favorable prices and staying the course through up markets and down. You let the market come to you. Period.
Introducing Motley Fool Independence Fund
For years, we've been hearing from Motley Fool community members who have wanted more hands-on help managing their personal investment and retirement portfolios.
Yet you have every right to wonder: After 15 years pointing out the shortcomings of the U.S. mutual fund industry, why would The Motley Fool of all places decide to launch a mutual fund of its own?
That's a fair question. First, although it's true that many U.S. mutual funds fail to keep pace with the market each year after accounting for expenses, Motley Fool analysts have observed that certain funds do actually deliver impressive returns at a reasonable cost.
Second, more than 90 million hardworking Americans own mutual funds already, either in brokerage accounts or in their 401(k)s. Many of our community members are surely among those ranks. You probably are as well.
So, you see, when you "Declare Your Independence," it's our goal to help you combine the ease and convenience of mutual fund investing with the confidence that comes from investing in partnership with a friend you can trust.
Finally, there's the question of transparency. We think you work too hard for your money to send it off to some cold financial institution in return for scant communications that are as indecipherable as they are infrequent.
That's why, when you invest your money with Motley Fool Independence Fund, we promise to talk to you frankly, in plain English, like a trusted partner. We might even have a little fun along the way.
So, how did we get here?
The Motley Fool was founded in 1993 by two brothers, David and Tom Gardner, in a converted garage behind David's family home in Alexandria, Va.
That's not far from where legend says George Washington hurled his famous silver dollar across the Potomac -- although it's very far, indeed, from the hustle and bustle of Wall Street. That's no accident, either.
The Motley Fool didn't start out as a financial-services company. The mission was, and always will be, to build a community of independent yet like-minded investors drawn together by two passions:
- Trying to identify the world's best-run, most innovative, profitable companies, and sharing what we've found with you, our fellow individual investors.
- Offering investors an objective, unbiased, and friendly alternative to a conflicted Wall Street publicity machine and stodgy mainstream financial media.
Fifteen years later, The Motley Fool is still a family business, with 235 employees, 200,000-plus premium newsletter subscribers, and 4 million online visitors per month -- and many of those visitors and customers proudly identify themselves as "Fools."
But you probably already know that. You may already be one of us!
Now, what if you could invest with this guy?
For years, he was among the most widely followed of all of The Motley Fool's independent stock analysts. He was read regularly by investors worldwide.
In 2000, he fought shoulder-to-shoulder with legendary shareholder advocate Arthur Levitt to help pass Regulation Full Disclosure, in a bid to protect the individual investor from Wall Street's avarice.
In 2001, he went to bat again for the individual investor before Congress, where he let loose on the stomach-churning abuses of Ken Lay's gang of white-collar crooks at Enron, among others.
Yet for all of his work championing the individual investor, the gentleman you're about to meet is first and foremost a dedicated stock analyst, with a passport full of stamps from seven continents and years of business and investing experience.
We believe this is a fortunate combination indeed. It's your opportunity to invest with an analyst who combines a deep understanding of global markets with an unshakable temperament and a lifelong commitment to you, the individual investor.
So who is this gentleman? You may already know him. His name is Bill Mann. And we are proud to introduce Bill to you as the portfolio manager of a new alternative for individual investors -- Motley Fool Independence Fund!
Where will we invest your money?
Put plainly, we seek out value.
We will seek out companies that we believe are solid, whether small or large ... companies we've identified as having top-notch managements, durable business models, and rock-solid balance sheets ... companies working in important industries we understand.
And although the market offers no guarantees, it is our mission to buy these companies for you at meaningful discounts to what we consider to be their fair values.
We leave market-timing to others. We invest in companies, not stocks, and we don't claim to have particular insight into the short-term movement of stocks or markets. In short, ours is a process of deep fundamental analysis.
That process is grounded in the belief that eventually, the market always wakes up to true value, and that our ownership stakes in the world's best companies offer us the best opportunity to increase our wealth for years to come.
And then there's the most important question of all ...
For years, The Motley Fool has argued that mutual funds are an expensive alternative for most investors. More often than not, it seems that with mutual funds, you get what you don't pay for.
John Bogle, the father of modern index funds, argues that cost is the single most important predictor of any fund's long-term performance. For Bogle, it's simple: The lower the cost, the better fund.
Yet we're concerned that most investors don't pay enough attention to costs -- and not just the management fees that funds charge you each year. There's also turnover, capital-gains taxes, trading commissions, and so-called "friction costs."
In his book The Battle for the Soul of Capitalism, Bogle argues that over the course of your investing career, these costs can eat up to 80% of your rightful profits. That's why, although we do accept an annual fee for managing your Independence Fund account, we have taken steps to keep our fees in check.
For one thing, Motley Fool Independence Fund is a no-load fund. That means you never pay an upfront sales charge or commission to invest. You don't pay so-called 12b-1 fees to help us market the Fund, either. Of course, you will pay for the Fund's operating expenses, which are estimated to equal 2.30% of the Fund's assets over the first year of the Fund's operations. However, the Fund's investment adviser will waive its fees or reimburse Fund expenses to keep the annual expense ratio at 1.35% until at least February 28, 2011.
To keep the Fund's expenses low, we also discourage small accounts and short-term trading by assessing a $24 annual fee on accounts of less than $10,000 in value, as well as a 2.00% redemption fee on shares redeemed within 90 days of purchase.
And unlike too many U.S. mutual funds, which typically hold a stock for less than one year, we intend to be long-term, buy-and-hold investors at heart.
There's one more thing ...
Did we mention we get paid more for beating the market?
When we don't outperform our benchmark, we make less. That's because we've opted for an unusual compensation model that allows our fees to increase or decrease depending on the Fund's performance.
In the industry, we call this a "fulcrum fee" structure. You can learn more about how it works by reading the Motley Fool Independence Fund's prospectus.
This unusual component of our fee structure gives your manager an incentive to earn the highest possible return relative to the market, not merely pump up the Fund's assets, the way most other funds do.
Just as important is that your portfolio manager, Bill Mann, is a meaningful shareholder in the Fund. He's investing right along with you. And here's something else: The Motley Fool has $1 million of its own money invested in Motley Fool Independence Fund.
So, you see, our interests really are aligned with yours, in more ways than one.
A word about risk
Of course, any investment comes with risks. We don't promise that you'll make money with the Fund. Over any given time period, no matter how hard or how long a fund's investment adviser works, the value of that fund could go down, and you could lose money, including principal. We endeavor to find companies that are both great businesses and great investments, but there can be no guarantee that we will succeed. Keep in mind that our fund is new, without a long-term track record.
And because the Fund is able to invest in companies of any size around the world, we may at times be heavily invested in small-cap stocks and foreign securities, each of which presents extra risk. Small-cap stocks tend to be more volatile and less liquid than their large-cap counterparts. Fluctuations in currency exchange rates can cause losses when investing in foreign securities, with emerging markets presenting additional risks of illiquidity, political instability, and lax regulation. We strongly encourage you to learn more about the Fund's strategies and risks by reading the prospectus.
Motley Fool Independence Fund seeks to achieve superior long-term capital appreciation by investing primarily in common stocks and equity-related securities. This fund is not for everyone. If you're seeking something other than long-term capital appreciation -- for example, current income to live on -- or if you're not comfortable with the risks, or if you expect to need your money back soon, this is not the fund for you.
Otherwise, do read on, because ...
You are on the road. You have taken the first step.
For years, you have asked for a more "Foolish" mutual fund -- one that aspires to deliver shareholder value through thoughtful independent research and analysis; honest, easy-to-understand shareholder communications; and a fair, performance-based fee structure. In short, you told us that you want to invest in partnership with a friend you can trust.
Frankly, we think those are reasonable requests. Motley Fool Independence Fund is our heartfelt answer. Our pledge is to deliver.
By reading this far, you have taken a very important first step toward achieving your financial dreams.
Thank you for your interest in investing with us. We look forward to the opportunity to work together. Your next step is just as easy. Simply look over our prospectus (MarketWatch says it "may well be the best prospectus in the history of the fund industry"), and then take just three minutes to fill out an account application and get invested today.
Isn't it time? Declare your independence!
Simply click here to get invested.
The investment adviser for Motley Fool Independence Fund is Motley Fool Asset Management, LLC, a wholly owned subsidiary of The Motley Fool Holdings, Inc., which is a multimedia financial-services holding company. Shares of the fund are distributed by BNY Mellon Distributors Inc., Valley Forge, Pa., a registered broker-dealer not affiliated with The Motley Fool.