Covestor is an online platform that opens up traditional money management services to a wider public by allowing its members to mirror the strategies of proven investors, trade for trade, from the comfort of their own accounts. Users can automatically match the real trades of successful investors, or can share portfolios and earn fees for the hard work they are already doing.
Covestor is part of a cohort of startups challenging the traditional mutual fund industry, which manages $10 trillion for people primarily saving for retirement while taking a 1 to 3 percent cut in fees. These startups say the industry isn’t transparent — it’s difficult to discern whether fund managers are genuinely skilled or are beating market returns purely with luck.
Covestor says its model allows skilled individuals to earn fees for their talent and gives investors a way to find successful fund managers who won’t take nearly as large a cut as their traditional counterparts.
Over $500 million dollars in securities are shared through the service. Its members are located in more than 100 countries and hold positions in over 10,000 different securities. All securities in mirroring accounts are purchased in the clients name and held in custody at an independent broker-dealer.
