Spark-backed Covestor bringing copy trading to 50K investors a month
By Taryn Plumb, Special to the Journal
Courtesy
Successful investing is a skill, like any other.
It's a fact that Rikki Tahta learned after years of watching his oil executive cousin transfer his industry knowledge into fruitful trades on the stock market. Tahta, a serial entrepreneur and investor, attempted to capitalize on the advice his cousin happily offered, but ultimately wasn't as prosperous.
What he realized: Success lie in copying his relative's trades, in real time.
And so Covestor was conceived. The Boston-based company offers an online marketplace where investors can comparison shop for money managers, then duplicate their portfolios and trades. Initially founded in London by Tahta in 2007, Covestor was later relocated to New York City, then Boston in November 2012.
“We basically bring top-performing money managers to a very broad audience,” said CEO Asheesh Advani.
In what he described as a “completely honest and transparent” process, investors can view managers' backgrounds and track records, and filter results by portfolio or account types, asset classes, allocation strategies, geography, cap biases, and manager approach, type, or style. Tools on the site also help them determine the right fit, based on risk tolerance and goals.
The company's “Portfolio Sync” technology then allows real-time trade replication.
Managers set their own fees, which range from .25 percent to 2 percent, and Covestor derives its revenues from taking a scaling percentage of those – determined by various factors on a case-by-case basis – according to Advani.
In the end, investors benefit from the expertise of successful managers they likely wouldn't otherwise have access to, Advani said, while managers, in turn, reach more prospective investors and build up a track record.
There are now about 100 managers in Covestor's marketplace, which is curated: Managers apply to join, then go through a trial period. They are then formally added to the site if they meet the expectations of the investment committee, which is comprised of the company's management team, as well as board members John Sinclair, former director of research at Fidelity Investments, and James Cornell, managing director of Spinnaker Capital and The Bollard Group.
Advani said the company also has plans to allow hedge funds to join the marketplace, because they're now allowed to do so with the passage of the American Jobs Act.
Ultimately, Covestor reaches more than 50,000 prospective investors across the U.S. every month, Advani said, and has doubled its business – in terms of assets on the platform – since the beginning of the year.
Likewise, managers have “significantly outperformed” the market: As of June 10, the 10 managers with the most client assets in their portfolios have beaten the S&P 500 index by 28.5 percent over the last year.
With 25 employees, the company is backed by roughly $28 million in capital, including a $12.75 million Series B round announced in June, from Union Square Ventures, Spark Capital, Amadeus Capital Partners and Bay Partners.
Looking to the future, Covestor is recruiting a head of marketing, Advani said, and is also seeking out strategic partners.
“Boston is one of the asset-management centers of the world,” he said. “There's great talent here.”
Original story link.
It's a fact that Rikki Tahta learned after years of watching his oil executive cousin transfer his industry knowledge into fruitful trades on the stock market. Tahta, a serial entrepreneur and investor, attempted to capitalize on the advice his cousin happily offered, but ultimately wasn't as prosperous.
What he realized: Success lie in copying his relative's trades, in real time.
And so Covestor was conceived. The Boston-based company offers an online marketplace where investors can comparison shop for money managers, then duplicate their portfolios and trades. Initially founded in London by Tahta in 2007, Covestor was later relocated to New York City, then Boston in November 2012.
“We basically bring top-performing money managers to a very broad audience,” said CEO Asheesh Advani.
In what he described as a “completely honest and transparent” process, investors can view managers' backgrounds and track records, and filter results by portfolio or account types, asset classes, allocation strategies, geography, cap biases, and manager approach, type, or style. Tools on the site also help them determine the right fit, based on risk tolerance and goals.
The company's “Portfolio Sync” technology then allows real-time trade replication.
Managers set their own fees, which range from .25 percent to 2 percent, and Covestor derives its revenues from taking a scaling percentage of those – determined by various factors on a case-by-case basis – according to Advani.
In the end, investors benefit from the expertise of successful managers they likely wouldn't otherwise have access to, Advani said, while managers, in turn, reach more prospective investors and build up a track record.
There are now about 100 managers in Covestor's marketplace, which is curated: Managers apply to join, then go through a trial period. They are then formally added to the site if they meet the expectations of the investment committee, which is comprised of the company's management team, as well as board members John Sinclair, former director of research at Fidelity Investments, and James Cornell, managing director of Spinnaker Capital and The Bollard Group.
Advani said the company also has plans to allow hedge funds to join the marketplace, because they're now allowed to do so with the passage of the American Jobs Act.
Ultimately, Covestor reaches more than 50,000 prospective investors across the U.S. every month, Advani said, and has doubled its business – in terms of assets on the platform – since the beginning of the year.
Likewise, managers have “significantly outperformed” the market: As of June 10, the 10 managers with the most client assets in their portfolios have beaten the S&P 500 index by 28.5 percent over the last year.
With 25 employees, the company is backed by roughly $28 million in capital, including a $12.75 million Series B round announced in June, from Union Square Ventures, Spark Capital, Amadeus Capital Partners and Bay Partners.
Looking to the future, Covestor is recruiting a head of marketing, Advani said, and is also seeking out strategic partners.
“Boston is one of the asset-management centers of the world,” he said. “There's great talent here.”
Original story link.
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