Metaverse Investment Fund Provides Hedge Against Economic Instability

I had the opportunity to sit down with Shaun Altman last week to discuss the upcoming future for the Metaverse Investment Fund(MIF), a privately held Hedge Fund that conducts currency arbitrage with both RL and Virtual World Currencies.

Altman is one of the oldest and most respected members of the Second Life Financial community, notable for formerly being the CEO of Cyberland (CYB:WSE), which started as the first publicly owned company in SL. Originally CYB(WSE) was listed on the MSE, and later brought to the WSE via a merger of the two exchanges. The WSE has suffered for the most part of this year from a lack of investor confidence, a general halt to trading that lasted months, and the recent migrations of CAR(ISE), FED(ACE), FAG(ISE), and most recently, ALC(ISE).

The ISE and ACE have been the benefactors of recent WSE relistings, with surges in volume and active accounts following in the wake of each migrant.

The MIF focuses on short-term arbitrage trades to generate growth and returns, and has quietly accumulated L$6,417,389.59 worth of assets since February 1, 2008, and has achieved a 38.7257% direct return on investment for shareholders according to the publicly available financial reports.

"We're about to start doing active marketing for the first time ever," Altman explained, "So far we've only put out a couple of PRs and relied on word of mouth."

This word of mouth has been successful, as many of the most recognizable names in Second Life Investing have had considerable stakes in the firm since the very beginning.

Altman said, "I'm happy that we've been able to meet my initial goal of providing investors with a safe and secure alternative to all of the amateur-hour nonsense, as well as the schemes and scams that led to its founding. Now that we've refined the operation and documented a track record, its time to embrace a larger audience."

Mirroring RL hedge funds and currency arbitrators, the MIF is not open to discussing the details of their day to day operations. "Like any arbitrage fund, we don't discuss our specific play book. We're innovators, and have no real interest in assisting the hoards of duplicators that are out there."

Describing the evolving nature of MIF's reach and objectives, Altman said, "Our program isn't really specific to Second Life any more, we deal in multiple virtual and real currencies at this point, and will probably begin opening up branch offices outside of Second Life soon."

Regarding the upcoming advertising blitz, Altman stated, "We're going to focus mostly on the specifics of our track record and our tracking vs. real world investments. Our performance speaks for itself, and what it says is a lot more relavent than any PR talk. We'd like to see more (of our clients publicly state) the returns on their actual investments."

In what sets MIF apart from other SL investments and securities, Altman described what he feels is MIF's strongest suit. "What's even more interesting is how easy it is to divest from MIF, when contrasted to stocks, etc. Because we're so liquid, we don't have to depend on new investors constantly flowing in to an "open market" to cash out older investors, so we're not subject to the wild price fluxuations that occur due to lack of liquidity in the "equity" markets. Instead we can deal with our investors directly and have them out very quickly, at full value, whenever they'd like."

It is not yet possible to invest directly into MIF via the website, but the fund does deal directly with a handful of investors who are not active participants in Virtual Worlds.

On payment options Altman explained, "Currently we use wire transfers for (out of world deposits), but we're looking for a way to do it on the web site without anyone having to eat a 3% fee (PayPal etc). We may end up finding that, or we may just start taking check/money order. We can use Mass Pay on our end and keep the cashout fee to $1.00, but clients can't really use that to deposit.

Because MIF is not a publicly traded entity, the question poses itself--what regulating body does it adhere to? Does it follow the SLEC? Any plans to ever become a publicly traded firm?

"None, and no," Altman emphatically stated, "I created MIF precicely to solve the problems created by the people offering up stocks and fake regulation, only to generally crash due to fraud, lack of liquidity etc. We have no interest in joining into the problems that we're trying to correct. We'd take an interest in the regulators if they were real or had any usefulness. In my view though, it's just roleplay regulation. I feel it that it does more harm than good, as it offers up a false sense of security to hear that something is "regulated" when really they're just playing store."

Even with the recent uncertainties in the Second Life Economy, Altman sees no danger to the MIF bottom line. "We don't see any data to suggest that virtual world economies will do anything other than continue to grow exponentially in the years ahead. Price increases are natural with any product or service, and the market will adapt. They may have negative or positive impacts on some individuals, but as a whole, the economy in Second Life will get through this or any other price increase just fine."

Although Altman may not have plans to enter into the Securities Market directly, he does see a place for MIF as a participant, "We operate at such broad levels, we make an excellent hedging vehicle to protect public companies from volitility in specific market sectors. We're actually fairly shocked that more public companies don't have idle cash in an MIF account earning yields."

Has MIF any designs on aligning with an outside regulated bank to perhaps overcome the Linden Lab policy regarding "banking"?

"We don't really see any need to circumvent the ban on banking. we're very supportive of the banking ban. The Ginko scheme was an important motivator for me to create this fund."

The approach that the MIF recommends for individuals with small to moderate amounts of Lindens to invest is to place "regular investments of an amount thats reasonable to you. The minimum investment is L$1.30. The maximum amount we'd accept (globally) right now would be somewhere around 2.5mil USD. The ideal amount is what you're comfortable with."

As the Second Life Real Estate Market continues to flux under the uncertainty of Linden Labs policy, the MIF may become a more and more important tool for publicly traded companies and private firms to use as a vehicle to save and make profits while waiting for an upturn in their home sectors.

Finally, on financial reporting, Altman assured, "We generally do reporting and dividends weekly. We would issue faster updates if anything unusual were occuring though."