Scott Pape’s focus on funds trying to keep up with the Kardashians

Scott Pape says a new Kim Kardashian investment product may not deliver the bounty that people want.

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.

Reality TV star-turned-entrepreneur Kim Kardashian is launching an investment fund. Picture: Frazer Harrison/Getty Images

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!

The Scumbag Landlord

G’day Barefoot,

My wife and I are very lucky. We own two investment properties that basically pay for themselves. Trouble is, we live in another state and rent ourselves. If we sold our two rentals we could afford to buy a family home for cash – but we feel obligated to our tenants. Both rentals have long-term tenants and we charge about $50 a week less than market to help them out. If we sold, they’d be out on their own and unlikely to be able to afford to rent anywhere nearby, and their kids would have to change schools and I’d feel like a scumbag capitalist. What should we do to not make two families homeless but get ourselves into our own home?

Brendan

Hi Brendan,

You sound like the sort of bloke I’d like to have a non-alcoholic beer with.

As a renter yourself you understand just how absolutely bonkers things are right now:

The national rental vacancy rate sits at just 0.9 per cent, according to SQM Research. Meanwhile, rents have rocketed up 20.1 per cent in the last 12 months alone!

I have never seen anything like it.

It’s a terrible situation, and one that I’m glad I don’t have to grapple with … as a renter, or a landlord.

The Barefoot Investor Scott Pape’s new book will be released soon.

After all, my share portfolio doesn’t have feelings (nor does it suffer burst water pipes at 3am), and my dividends just magically appear in my bank account a couple of times a year.

That said, if I were in your shoes I’d sell the properties and buy your own family a home. That’s not because I’m a scumbag capitalist, but because your first responsibility is to your family.

Besides, there are other ways to help struggling people in your community than renting out a few joints slightly below the market rate. You could volunteer at a local food bank, or you could donate money to the Financial Counselling Foundation, who help and fight for some of the most vulnerable people in our community.

A Sticky Issue

Hi Scott,

My kids are beyond excited about your next book (you’re a big deal in our household). I asked my local bookstore but they didn’t know anything about it. Will it be released this year?

Lauren

Hi Lauren,

So my new book went to the presses this week (an Aussie printer, not in China!). However, the printers are in hell right now. Reason being, I insisted my new book have stickers as a reward system.

They turn the book into an adventure and make it more like a kit than a book.

It totally rocks … and it’s something I’ve always wanted to do, but I couldn’t find a publisher crazy enough to spend that much money on a wild idea. So, let’s all have a moment’s silence for the printer who has to add pages of stickers to the back of each and every copy of lots of books.

The official launch date is early November but I’ll be letting you Barefooters know ahead of time so your kids don’t miss out!

You’re a Puppet, Barefoot

Scott,

I read last week’s column. You’re pushing Vanguard?! Oh you really are an elitist WEF puppet.

Eva

Hello Eva (name unchanged),

Thank you for your comment. I always enjoy the nasty ones that get me Google-ing.

Turns out, ‘WEF’ stands for the World Economic Forum, and the conspiracy theory you seem to be alluding to is known as the ‘Great Reset’, which suggests that a secret group of capitalists and politicians are trying to control the economy.

Now, Eva, I really don’t know if that’s much of a secret — isn’t that just what sociopath billionaires and power-hungry politicians kind of, well, do?

Yet I have to pull you up for putting Vanguard in the same pot. If anything, it’s the exact opposite. Jack Bogle set up Vanguard in the 1970s to stick it to the Wall Street capitalists. He could have become a billionaire but instead chose to put investors first, so he set it up as a not-for-profit. Vanguard created the first index fund and has driven fees down for all investors the world over ever since.

Scott Pape enjoyed a letter from a reader calling him a “puppet”.

Mexican Wins the Lottery … Twice!

Scott,

I know you may get millions of emails every day, but I hope your team can forward this one to you. I’m Mexican and I came to Australia in 2018 and became a permanent resident. I came here carrying a 10-year debt from back home. But then I stumbled upon your book, and with the advice you gave I finally paid off my debt and no longer owe a single dollar (or Mexican peso). Thank you! You taught me something that I will carry for the rest of my life, and I cannot wait to start building a better future.

Gerardo

Hi Gerardo,

What I love about your story is that you won the lottery by making it to Australia … and best of all you know it. That’s given you a perspective that a lot of people born here simply don’t have. This country truly is the land of opportunity, and now that you’ve got your money sorted there’s no telling how far you’ll go. You Got This!

Ends.

Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions

The Barefoot Investor for Families: The Only Kids’ Money Guide You’ll Ever Need

(HarperCollins) RRP $29.99

If you have a money question, email [e-mail].

Originally published as Scott Pape’s focus on funds trying to keep up with the Kardashians