- The investing app Titan promises to provide a low-cost service that lets ordinary traders invest like a hedge-fund client.
- Titan requires users to deposit at least $500 to gain access to its research and other functions, and charges a 1% annual advisory fee.
- After users open an account and deposit money, Titan automatically invests their capital in a basket of 20 stocks.
- In an effort to reduce risk, Titan uses a portion of its users' capitals to bet against the benchmark S&P 500 index when markets are in a downturn.
After users open an account on Titan's mobile app and deposit money, the company automatically invests their capital in a basket of 20 stocks. These stocks are based on the most-popular positions at a group of around 175 hedge funds, based on their 13F filings. The basket is then updated once a quarter.
And just like some hedge funds, the app doesn't only go long stocks. It has a hedging function that uses a portion of its clients' capital to bet against the benchmark S&P 500 during downturns, like during the stock-market weakness at the end of last year.
According to Titan's website, its strategy was down 7.5% from launch in February 2018 through the end of the year, versus a 6.1% drop in the S&P 500. Through the first two months of 2019, Titan's portfolio is up 15.7%, versus an 11.5% increase in the S&P 500.
The app personalizes the percentage of the portfolio that is hedged, based on the investing style derived from questions it asks users about their risk tolerance. For example, a conservative portfolio has 20% of its value hedged, and an aggressive one has 5%.
Titan requires users to deposit at least $500 to gain access to its research and other services. It charges a 1% annual advisory fee, but no performance fee. By comparison, many passive exchange-traded funds in the US charge 0.04% or even no annual management fee, while hedge funds have historically charged a 2% management fee plus around 20% of the annual profit.
Business Insider took Titan's fund-management offering for a spin to see how it works:
The initial application is limited to mobile users. When you click the "join in" button on their website, they direct you to download the app.
You'll then be asked a handful of standard questions that any brokerage is required by law to ask of a potential customer in order to verify your identity.
Titan asks about your income, net assets, investing experience, and very importantly your investing style, which can be conservative, moderate, or aggressive.
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