Client Accounts allow you to mirror in real time the trades that top investors are making with their own money. It gives you the benefit of active management by experts, like a hedge fund, with the safety and security of a managed account.
Covestor only charges fees on investments you make in your account. There are no entry fees, exit fees, load fees or other hidden charges. The only other fees you will be charged are those levied by the broker. Learn more about Covestor fees.
The performance fee is a fee structure that compensates a Portfolio Manager for generating positive returns, it is calculated as a percentage of the increase in value of a client's investment in the portfolio.
For portfolios that charge a performance fee, the typical fee schedule is:
- Management fee from 0.25% to 1.5%, - Performance-based fee of 2%-12%
The management fee is charged based on the assets invested in the portfolio per annum, accrued daily, charged monthly. The performance fee is only charged on any positive returns generated in the investment. Even within the same investment strategy, different clients can have different fee structures; some pay asset-based fees, while others pay performance-based fees. Some client accounts have fee structures that include elements of both asset-based and performance-based fee structures. Please review the Informational Brochure for further details.
No. Covestor does not charge you to redeem from portfolios but you will be charged transaction costs by the broker to close your positions.
To open an account you need to fund it with a minimum of $5,000. If you plan to invest in a number of portfolios, or those that trade heavily we recommend that you fund the account with a minimum of $30,000 to prevent your account being locked under SEC pattern day trading rules.
Covestor does not act as custodian. We have a custodial arrangement with Interactive Brokers LLC to provide these services on your behalf. Unlike a mutual fund, you continue to be the direct owner of the underlying securities that are held in your own brokerage account.
Interactive Brokers is a member of the Securities Investor Protection Corporation (SIPC). As a result, our clients' assets are protected up to $500,000 in value (including $100,000 in cash awaiting reinvestment) by SIPC. It also provides protection for broker firms against losses should a SIPC member firm fail financially and become unable to meet obligations of its securities clients.
Yes. You can invest in as many portfolios as you want in a single account. When you sign in to Covestor you can see your positions, both in aggregate and broken out by investment.
Typically trades are replicated within one minute. Actual times may vary.
If Interactive Brokers does not have enough stock available to short, you may not be able to replicate the Portfolio Manager's trade. This will result in performance drift.
To ensure that you invest only in portfolios that are suitable for your investment objectives, risk tolerance and financial wherewithal, Covestor assigns you (and all Covestor clients) a risk score based on your responses to a risk questionnaire. Your client risk score assists Covestor in determining which portfolios you may invest in. You may only subscribe to portfolios that have a risk score less than or equal to your own risk score. Below are definitions of the individual risk scores Covestor assigns to clients.
Risk score 1: Is assigned to clients with the following risk profile: “My primary goal is cautious capital growth. While somewhat conservative, I am willing to accept some level of fluctuation in my portfolio value. I am comfortable investing mostly in ETFs, funds and large cap equities, and am looking for generally lower risk than broad equity markets.”
Risk score 2: Is assigned to clients with the following risk profile: “My primary goal is capital growth and I am willing to accept fluctuation in my portfolio value. I am comfortable investing in equities, and am looking for a similar risk profile to broad equity markets.”
Risk score 3: Is assigned to clients with the following risk profile: “My primary goal is capital growth plus. I am willing to accept fluctuation in my portfolio value and prepared to accept leverage to achieve my investment goals. I am comfortable investing in both long and short equities, using leverage, subscribing to concentrated portfolios, as well as portfolios that may contain some basic option strategies. I am looking for a more complex portfolio or higher risk profile than broad equity markets.”
Risk score 4: Is assigned to clients with the following risk profile: “My primary goal is aggressive capital growth. I am less concerned with the level of fluctuation in my portfolio value and I am prepared to take substantial risk to achieve my investment goals. I am comfortable investing in both long and short equities, using leverage, subscribing to concentrated portfolios, as well as portfolios that may contain a full range of options strategies. I am looking for significantly higher risk than broad equity markets.”
Risk score 5: Is assigned to clients with the following risk profile: “My primary goal is speculative capital growth. I am prepared to take exceptional risk in my portfolio to achieve my investment goals, including taking speculative and concentrated positions in high risk securities. I am comfortable investing in both long and short equities, using leverage, subscribing to concentrated portfolios, as well as portfolios that may contain a full range of options strategies. I am looking for significantly higher risk than broad equity markets.”
Covestor launched Smart Beta portfolios in 2016. For informational and educational purposes, Covestor calculated hypothetical back-tested returns to allow clients considering these portfolios to evaluate how they would have performed if Covestor had offered them to clients before August 2016.
Hypothetical back-tested returns are calculated using historical data to test the viability of a particular investment strategy, and attempt to indicate how a product constructed with the benefit of hindsight would have performed during a certain period in the past if the product had been in existence during that time. Hypothetical back-tested returns are presented to help a client by indicating how a particular investment strategy might have performed over time.
Hypothetical back-tested returns are hypothetical and do not reflect actual trading and do not place any client money at risk. Hypothetical returns are based on criteria applied retroactively with the benefit of hindsight and knowledge of factors that may have positively affected the results of the portfolio and, therefore, they cannot account for all financial risk or other market factors that may affect the actual performance of this portfolio. Actual results could thus differ from hypothetical back-tested results depending on factors such as: broad stock market performance, factor returns, available liquidity, interest rates, economic growth, transaction costs, and other market factors.
When hypothetical returns have been used, the details and inherent limitations of the returns are clearly shown on the portfolio details page.
Yes. You can open an account for whatever entity you choose.
Not at this time. To enable us to mirror trades in your brokerage account you must open a managed account with Interactive Brokers and authorize us to trade in it on your behalf. Once you sign up for an account with us, we send you all information needed to open an Interactive Brokers account linked to Covestor.
Interactive Brokers offers a number of ways to fund your account, including wire transfer and payment by check. Further details on options and necessary instructions are provided when you sign up with us.
Yes. You can transfer assets from your existing account to fund your account but we will need to sell all non-cash positions before you can start placing instructions.
You can set your risk score by logging into your Covestor account and providing responses to a set of risk assessment questions. Based on a proprietary scoring formula, you are assigned a risk score number between 1 and 5 based on your willingness and ability to take risk. You may only subscribe to portfolios with a risk score less than or equal to your risk score.
On the sign in page click the 'Forgot your password?' link, then enter the email address that you have used to register with Covestor and click the 'Send' button. We will send you a temporary password that you can change when you sign back in.
Once you sign in, you can click on the Settings link on your dashboard menu to go to the stock exclusions section in your account. Here you will be able to specify individual stocks that you don't want replicated for you.
No vacancy means that a portfolio is currently closed to new investors. Existing investors are only able to redeem their investments. If you are interested in investing in a portfolio that currently has no vacancy please contact us and we will let you know when spaces become available.
Your account is updated continuously throughout the day. This excludes corporate actions (e.g. dividends, stock splits etc.) which can only be reconciled overnight. Please see the "As of market close" tab on the Portfolio page of your account for a fully reconciled view.
During market hours instructions are processed in the order they are received. After market hours instructions will be processed at the next market open.
Covestor management fees are calculated and accrued daily.
The subset of portfolios you can invest in is determined by your risk score as well as the type of account you have opened with your broker. Some Portfolio Managers have opted for accounts with extended trading capabilities (e.g., immediate settlement of trades, ability to use leverage, etc.). If your account does not possess the same abilities, Covestor would not be able to replicate the Portfolio Manager's trades in your account. This is why some portfolios could be unavailable to you. For further details on account types, please contact us.
Covestor offers a large selection of portfolios to its clients. To ensure clients pick a suitable investment for their risk profile, Covestor limits clients’ selection of portfolios using the following four criteria:
- Clients need to have a client account risk score that is greater than or equal to the portfolio they want to subscribe to.
- Clients need to have enough funds available in their Covestor-linked brokerage account to invest at least the portfolio subscription minimum investment amount.
- Clients need to have the required margin permission on their brokerage account. (For example,if the manager uses a Reg-T or Portfolio margin account, the subscribing client will need to have greater or equal margin permission on his Interactive Brokers account).
- If the portfolio the client wants to invest in trades options, the client needs to have the required trading permission on their brokerage account. (For example, if the manager has Limited or Full options trading permission, the client will need to have greater or equal permission on his Interactive Brokers account), as well as agree to and sign the Covestor option suitability disclosure.
When completing your account application with Interactive Brokers their website outlines the various funding options, including Wire Transfer, Electronic Bank ACH Transfer and Check. Instructions are provided for each method of deposit.
Your account can be funded once you have been given brokerage account number. Let us know when your funds have been sent and by what method - we will monitor your account to confirm the funds have cleared and activate your Covestor account.
Interactive Brokers requires you to tell them when you have made a deposit to match incoming payments to your account. To do this fill in a Deposit Notification by signing in to Interactive Brokers, select Funds Management and then Deposits & Inbound Transfers. Alternatively, click this link to be automatically re-directed to the correct page when you have logged in.
Sign in to your Interactive Brokers Account, select Funds Management and then Withdrawals & Outbound Transfers. Please notify us if you withdraw money.
Yes. You can change your risk score at any time in your account settings.
No. Once placed instructions cannot be cancelled. If you placed an instruction after market hours please contact Client Relations for help.
To delete or disable your account, contact us.