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Covestor Disrupts Wealth Management with New Multi-Managed Account

Retail investors replicate different models inside an MMA, with transparent access to their account.

In contrast to hedge funds and mutual funds where the manager's decisions are kept secret until they report them quarterly, semi-annually or if they report them at all, here there is complete transparency into the managers' holdings and returns.

"We provide all information for the clients to make the decisions on which portfolios they want to follow," said Blacher. "You can see the transactions, and are able to view the models available for subscription," said Blacher. Investors can view the model manager's holdings and performance. "It's all validated because we're capturing the information and calculating the performance metrics," emphasized Blacher.

The individuals or professionals sharing their strategies with CVIM have been building a track record for the last two-to-three years. "We're tracking these models, giving you information on the person's background, instruments they're interested in and their strategy," noted Blacher.

Part of the philosophy of CVIM is that the model manager — who is either an individual or a professional RIA — has skin in the game. "You're in it together, they've got their own money at stake," so they have a vested interest in this too.

Ten models are currently available for subscription, two of which are professional investment advisers and eight are individuals. One such adviser is Sean Hannon, an RIA with Epic Advisors, LLC in New Jersey, who has an annualized return of 83.46 percent and 1,167 followers on the site. He has a fundamental long/short style and tracks about 150 stocks. "He's a classic value investor who used to work at Morgan Stanley and Goldman Sachs," noted Blacher. You can click on "followers" and see which members are tracking Sean and then click on Epicadv to see which members Hannon is tracking. "The people are absolutely tremendous, they have incredibly compelling strategies," said Blacher. They represent diverse strategies with some trading one-to-five times a month and up to 50, 60 or even 80 times a month.

CVIM utilizes as a breeding ground for model managers it can recruit. CVIM is adding five-or-10 models a month and is gaining interest from hedge fund managers who don't have a retail channel, according to Blacher. One individual model manager is dubbed retire48 who trades his own I.R.A. account in e-Mini futures. Another is , who trades his entire retirement account through CVIM. His return since inception (June of 2007) is 29.74 percent.

Investors can pick a manager's models and automatically replicate the strategies in a single account, which at this point, are limited to U.S. stocks and exchange traded funds (ETFs) and ADRs. The investor's cash is auto-traded to replicate the different strategies of the model managers they select. 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

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