Tired of underperforming mutual funds and high management fees? Today, Covestor Investment Management launched an online investment site that allows retail investors to trade alongside other individual or professional managers by replicating the trades of model managers.
The concept builds upon Covestor.com, an online social networking/portfolio-sharing site launched by the company's founders in 2007, where tens of thousands of investors are sharing their trading activity with other participants. (See "New Online Investing Site Poses A Threat to Fund Managers"). They can view their verified performance metrics and receive email notifications of their top stocks, for instance.
Now the founders of Covestor have formed CVIM, a registered investment advisor (RIA) with the SEC. With a minimum of $10,000, investors can subscribe to different strategies of individuals or professional managers whose strategies they follow on the site.
"We always had the idea of de-institutionalizing investment management, says Perry Blacher, CEO of Covestor Investment Management in an exclusive interview with Wall Street & Technology. Combining the tools of social networking with the transparency of online brokerage, Blacher and his team have created an open platform.
"You get the active management of say a hedge fund or mutual fund, but you get the transparency and safety of an end account in that you still own the end securities," explained Blacher, who previously ran business development for Microsoft MSN's Internet properties in Europe and worked as a consultant with McKinsey and worked at Chase Capital Partners in private equity.
In fact, sometimes the expert is an individual with a proven track record investing their own money and not a professional. "Lots of people take recommendations from friends, yet there's no mechanism to invest with friends, and you have to be there when he (or she) has an idea," said Blacher.
To ensure safety and make sure that investors can see that the trades took place in their accounts, they open up an online brokerage account with either TD Ameritrade or Interactive Brokers. "You can see that you own the securities, and what you own," said Blacher. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio