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A startup's promising to let Main Street invest like a hedge fund. We checked it out, and it's beating the market so far this year

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Trader stock

  • 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. 

The investing App Titan Promises to let Ordinary Traders Invest like a hedge-fund client.

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.



See the rest of the story at Business Insider


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This post first appeared on Shown's, please read the originial post: here

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A startup's promising to let Main Street invest like a hedge fund. We checked it out, and it's beating the market so far this year

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