The Finovate Debuts series introduces new Finovate alums. Today’s feature is HedgeCoVest, which demonstrated its Replicazor at FinovateFall 2014.
HedgeCoVest’s web-based tool enables users to replicate hedge fund investments in their own brokerage accounts. The platform is aimed at existing hedge fund investors, advisors, and retail investors seeking more flexibility.
The stats
- $900,000 raised
- 12 employees
- Product launched in September 2014
- 35+ hedge fund managers have signed up
- 50+ models coming in the next few months
Hedge funds vs. HedgeCoVest
While hedge fund returns can be impressive, investing in them is not always practical. To qualify, investors need to have a net worth of $1 million (excluding primary residence). Additionally, hedge funds have prohibitively high account and strategy minimums.
Investors also face liquidity restrictions, locking them into strategies, and there’s little transparency into strategy specifics.
In comparison, HedgeCoVest’s minimum is $30,000, and investors can allocate as little as $10,000 to individual strategies. Liquidating investments is easy, just one click. HedgeCoVest charges a flat fee of 2.5%, instead of the often-confusing legal, audit, and trade fees incurred with traditional hedge funds.
How it works
HedgeCoVest enables investors to automatically replicate real hedge fund portfolios in their own brokerage accounts, in real time. It does this using a trading technology called the Replicazor, which automatically mirrors hedge fund investments.
In milliseconds, the Replicazor registers a hedge fund trade and makes the same trade for HedgeCoVest clients.
The overview page (below) is used to search and compare available hedge fund models.
Users select a model for an in-depth view of the strategy. The overview tab breaks down the exact sector allocations, both long and short.
Other tabs include statistics (shown below), real-time fund performance, and an About Us section that profiles the firm and person behind the strategy.
When the user finds a strategy they like, they select Invest Now, enter the amount to allocate, and choose their leverage. The Replicazor buys the securities into the brokerage account and tracks the holdings going forward.
By trading outside of the rigid hedge fund structure and requirements, HedgeCoVest opens hedge fund investing to a wider audience.
Check out HedgeCoVest’s debut of the Replicazor at FinovateFall 2014.