Domain Developers Fund
Encyclopedia
Domain Developers Fund is the first public open-ended alternative investment
fund exclusively invested in Internet domain name
s. DDF maintains an inventory of websites and domain names, including a wide variety of gTLD
and ccTLD
domains, from which it extracts advertising revenue through a combination of pay per click
advertising, affiliate marketing
and domain domain parking
. Internet domains are perceived as an alternate asset class for investment diversification
.
vehicle for a small team of investors led by Michael Marcovici. The fund’s founders pooled their separate domain investments into a single portfolio and, after it proved to be a profitable investment in 2009, allowed families and friends to invest. In February 2010 the fund incorporated in the Cayman Islands and converted to an open-ended investment fund. The current directors and managers of the Fund are Michael Marcovici and Alberto Sanz de Lama. The fund started accepting new investors on 1 August 2010.
s and drop auctions, a practice that bolsters portfolio liquidity and facilitates quick resale of domains. DDF uses mass registrations at TLD
launches and in emerging markets to expand its portfolio. The geographical breakdown for DDF's portfolio by domains is 45% emerging markets such as India, Colombia, Ukraine, China, Nigeria, 40% developed markets in Europe and North America and 15% in cash. The funds management rarely releases information about sales or acquisitions, recently DNJournal released news about the Fund selling cars.net which became the 5th highest sale ever in the .net TLD
. The portfolio's themes are law, medicine, retail, pharmaceuticals, banking, finance,insurance and food.
DDF has issued Class A shares for individuals and Class B shares for institutions. Class A shares charge a 2.5% management fee and a 25% incentive fee. Class B shares charge a 2% management fee and a 20% incentive fees. All shares are subject to a 5% hurdle rate – there is no incentive fee charged on the first 5% of returns. The lockup period is six months, and the fund uses up to 2x leverage.
Management owns 55% of DDF and reinvests 50% of performance fee revenue.
The DDF is highly uncorrelated to the S&P 500. An analysis of monthly DDF and S&P 500 returns from Aug 6, 2009 through Dec 1, 2010 revealed a beta of 0.192. Domain investing involves an asset class that is not highly correlated with other finance assets such as stocks and bonds. This increases the diversification of an investment portfolio and thus lowers its overall risk.
Alternative investment
An alternative investment is an investment product other than the traditional investments of stocks, bonds, cash, or property. The term is a relatively loose one and includes tangible assets such as art, wine, antiques, coins, or stamps and some financial assets such as commodities, private equity,...
fund exclusively invested in Internet domain name
Domain name
A domain name is an identification string that defines a realm of administrative autonomy, authority, or control in the Internet. Domain names are formed by the rules and procedures of the Domain Name System ....
s. DDF maintains an inventory of websites and domain names, including a wide variety of gTLD
Generic top-level domain
A generic top-level domain is one of the categories of top-level domains maintained by the Internet Assigned Numbers Authority for use in the Domain Name System of the Internet....
and ccTLD
Country code top-level domain
A country code top-level domain is an Internet top-level domain generally used or reserved for a country, a sovereign state, or a dependent territory....
domains, from which it extracts advertising revenue through a combination of pay per click
Pay per click
Pay per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
advertising, affiliate marketing
Affiliate marketing
Affiliate marketing is a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's own marketing efforts...
and domain domain parking
Parking
Parking is the act of stopping a vehicle and leaving it unoccupied for more than a brief time. Parking on one or both sides of a road is commonly permitted, though often with restrictions...
. Internet domains are perceived as an alternate asset class for investment diversification
Diversification (finance)
In finance, diversification means reducing risk by investing in a variety of assets. If the asset values do not move up and down in perfect synchrony, a diversified portfolio will have less risk than the weighted average risk of its constituent assets, and often less risk than the least risky of...
.
History
DDF was started in the Cayman Islands in 2008 as a private investmentInvestment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
vehicle for a small team of investors led by Michael Marcovici. The fund’s founders pooled their separate domain investments into a single portfolio and, after it proved to be a profitable investment in 2009, allowed families and friends to invest. In February 2010 the fund incorporated in the Cayman Islands and converted to an open-ended investment fund. The current directors and managers of the Fund are Michael Marcovici and Alberto Sanz de Lama. The fund started accepting new investors on 1 August 2010.
Portfolio
DDF's domains are normally acquired at domain name auctionDomain name auction
The domain name auction facilitates the buying and selling of currently registered domain names, enabling individuals to purchase a previously registered domain that suits their needs from an owner wishing to sell...
s and drop auctions, a practice that bolsters portfolio liquidity and facilitates quick resale of domains. DDF uses mass registrations at TLD
Top-level domain
A top-level domain is one of the domains at the highest level in the hierarchical Domain Name System of the Internet. The top-level domain names are installed in the root zone of the name space. For all domains in lower levels, it is the last part of the domain name, that is, the last label of a...
launches and in emerging markets to expand its portfolio. The geographical breakdown for DDF's portfolio by domains is 45% emerging markets such as India, Colombia, Ukraine, China, Nigeria, 40% developed markets in Europe and North America and 15% in cash. The funds management rarely releases information about sales or acquisitions, recently DNJournal released news about the Fund selling cars.net which became the 5th highest sale ever in the .net TLD
TLD
TLD is a three-letter initialism that may stand for:* Top-level domain, the last part of an Internet domain name* Tag Library Descriptor, an XML document that maps JSP tags to their handlers or associated files...
. The portfolio's themes are law, medicine, retail, pharmaceuticals, banking, finance,insurance and food.
Performance and Fees
In 2009, DDF registered a return of 124%. The 12-month performance ending in October 2010 was 42.47%.DDF has issued Class A shares for individuals and Class B shares for institutions. Class A shares charge a 2.5% management fee and a 25% incentive fee. Class B shares charge a 2% management fee and a 20% incentive fees. All shares are subject to a 5% hurdle rate – there is no incentive fee charged on the first 5% of returns. The lockup period is six months, and the fund uses up to 2x leverage.
Management owns 55% of DDF and reinvests 50% of performance fee revenue.
The DDF is highly uncorrelated to the S&P 500. An analysis of monthly DDF and S&P 500 returns from Aug 6, 2009 through Dec 1, 2010 revealed a beta of 0.192. Domain investing involves an asset class that is not highly correlated with other finance assets such as stocks and bonds. This increases the diversification of an investment portfolio and thus lowers its overall risk.
Facts
The following is a summary of disclosed facts mandated by the Cayman Islands Jurisdiction| Type | Open-Ended Administered |
| Jurisdiction | Cayman Islands Mutual Fund Law |
| Assets | Domains |
| share classes | individuals(Class A), institutionals(Class B) |
| Lockup period | 6 months |
| ISIN (Class A) | KYG280681076 |
| ISIN (Class B) | KYG280681159 |
| CUSIP No. (Class A) | G28068 107 |
| CUSIP No. (Class B) | G28068 115 |
| SIX Telekurs (Class A) | 11536830 |
| SIX Telekurs (Class B) | 11536925 |
| Bloomberg (Class A) | DOMDEVA KY |
| Bloomberg (Class B) | DOMDEVB KY |
| Directors | Michael Marcovici, Alberto Sanz |
| Advisory board | Marco Rodzinek, Philip Schindler, Stefan Piech |
| Management Fee | 2,5% (A) 2% (B) |
| Hurdle Rate | 5% |
| Incentive Fee | 25% (A) 20% (B) |
| Administrator | JP Fund Administrations |
| Auditors | BDO |
| NAV | monthly |
| Bank | Deutsche Bank |
| Web | www.ddf.lu |