Client accounts

Thinking of signing up?

Why should I do this?

  • What are the benefits of a Client Account?
    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.
  • What kinds of portfolios are available?
    A wide range of portfolios are available on Covestor, from sector specialists to large professional investors’ portfolios. Contact Client Relations if you would like to learn more, or search for portfolios based on your own interests.

How it works

  • What are the fees?
    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.
  • What are performance 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%, and

    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.
  • Are there fees to redeem from portfolios?
    No. Covestor does not charge you to redeem from portfolios but you will be charged transaction costs by the broker to close your positions.
  • What is the minimum deposit required?
    To open an account you need to fund it with a minimum of $10,000.  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.
  • How do I know my assets are held safely?
    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.
  • Can I invest in more than one portfolio?
    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.
  • How do you qualify the Portfolio Managers?
    All portfolios must meet our minimum criteria for participation before they are made available on Covestor, and all Portfolio Managers must comply with our trading rules. Learn more about how Covestor works.
  • How are Performance Consistency badges awarded to managers?

    This badge is designed to highlight portfolios that have demonstrated consistent performance. These ratings do not constitute personal investment advice. Portfolios need a minimum of 1 year performance history to be awarded a performance consistency badge.

    To award the badge portfolios are first ranked within peer groups based on multiple valuation metrics including Sharpe ratio, Sortino ratio, Omega ratio and Calmar ratio. Ranking is calculated with in strategy and risk score peer groups over multiple time periods within the last 3 years. The results are aggregated into a single score that can be used to compare portfolios across the platform. The final step involves stripping out those portfolios with very high concentration, volatility or performance slippage. Roughly the top quarter of portfolios within the remaining list are awarded the performance consistency badge.

    The investment team reserves the right to include or exclude certain portfolios from the badged list based on other qualitative factors.

  • How long does it take to replicate a trade?
    Typically trades are replicated within one minute. Actual times may vary.
  • What happens if you can't get the shares to short?
    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.
  • What does client risk score mean?

    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.”

  • What are hypothetical back-tested returns?

    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.

Opening an account

  • Can I open a joint, trust, corporate or retirement account?
    Yes. You can open an account for whatever entity you choose.
  • I hear you need a minimum of $30k to open an account, is this true?
    No.  The minimum deposit required to open an account is $10,000.  However, to invest in a portfolio that day trades as part of its strategy you must maintain a minimum account balance of US$30,000 at all times under SEC pattern day trading rules.
  • Can I use my existing brokerage account?
    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.
  • How do I fund my account?
    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.
  • Can I transfer positions from my existing brokerage account?
    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.

Already signed up?

Using the service

  • How do I set my client risk score?
  • I have forgotten my password. What should I do?
    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.
  • Where do I enter stock exclusions?
    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.
  • What does "no vacancy" in a portfolio mean?
    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.
  • Why doesn't my account look up to date?
    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.
  • Why is there a difference between the manager's performance and my own?
    We call this drift. There are a number of causes of drift including replication time, risk score, and stock exclusions. Drift is typically caused by managers trading outside of the trading rules, or in securities that are not replicated for clients. Learn more about performance drift.
  • I placed an instruction to invest/redeem a few hours ago. When will the trade orders be executed?
    During market hours instructions are processed in the order they are received. After market hours instructions will be processed at the next market open.
  • I was in a portfolio for a few days but received a monthly bill. Why?
    Covestor management fees are calculated and accrued daily.
  • Will I be able to invest in all portfolios?
    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.
  • Which portfolios can I invest in?
  • How are Covestor Smart Beta portfolios different from other portfolios on Covestor?
    The Covestor Investment Management team, under the leadership of Chief Investment Officer Sanjoy Ghosh, manages Covestor’s Smart Beta portfolios. The team is responsible for undertaking a systematic process to select stocks, construct the portfolios, continually monitor for any relevant events and periodically (at least quarterly) rebalance the portfolios.

    The other portfolios on the Covestor platform are managed by third-party investment advisers or hedge fund managers. These portfolio managers fund and trade a proprietary manager-owned brokerage account. In contrast, for each Covestor Smart Beta portfolio, Covestor funds and trades a proprietary Covestor-owned brokerage account. In both cases, each trade made by the portfolio manager (or Covestor) is automatically replicated in clients’ brokerage accounts based on which portfolios the clients have selected to invest in.

  • What is Smart Beta?
    Smart Beta is a broad term used to describe systematic rules-based investment strategies that do not use conventional market capitalization weights to construct a diverse portfolio. In an attempt to deliver a better risk and return trade-off than conventional market cap-weighted indices, these portfolios use alternative weighting strategies based on measures such as value, volatility or dividends.

    Smart Beta products do not usually involve as many active investment decisions as pure active management, but they are slightly more complex than market-weighted passive products. This is reflected in the typical cost for these strategies, which tends to be in the middle between active and passive strategies.

  • Why should I invest in a Smart Beta portfolio?
    Smart Beta portfolios are similar in some respects to passive index funds, except that the rules used to construct these portfolios are designed to slightly outperform a conventional passive index fund, particularly when adjusting for risk taken. Smart Beta portfolios typically charge higher management fees than passive index funds. But these portfolios have lower management fees than pure active investment strategies.

    These features make these portfolios suitable for a client that desires exposure to the broad stock market but is not sure which portfolio to pick.

Managing my account

  • How do I deposit funds?
    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.
  • How do I withdraw cash from my account?
    Sign in to your Interactive Brokers Account, select Funds Management and then Withdrawals & Outbound Transfers. Please notify us if you withdraw money.
  • Can I change my risk score?
    Yes. You can change your risk score at any time in your account settings.
  • Can I cancel an instruction to invest in or redeem from a portfolio?
    No. Once placed instructions cannot be cancelled. If you placed an instruction after market hours please contact Client Relations for help.
  • My brokerage account has been suspended due to pattern day trading rules, what do I do?
    We carefully monitor all our accounts for any such suspensions and will contact both you and Interactive Brokers to resolve the situation. If your account has been suspended we will be able close existing positions but not take new positions in your account.

    In order to prevent your account being locked under SEC pattern day trading rules, we recommend you fund the account with a minimum of US$30,000 if you plan to invest in either a number of portfolios or those that trade heavily.
  • How do I close my account?
    To delete or disable your account, contact us.