Covestor: Create Your Own Virtual “Hedge Fund”

What if you could have your own “hedge fund” where you make money off of people investing in your trading strategy, but without the hassle of getting a big financial degree, or raising millions in capital to get a fund off the ground.  Well that is where Covester comes in.  Covester is a website where investors can share their trades and insights, and other traders can decide to follow or completly mimic their portfolio.  If people decide to mimic your portfolio, you then get compensated for the profits they make.  You essentailly create your own virtual “hedge fund” without having to deal with raising huge amounts of money or limiting your followers to a few wealthy individuals.  All you need to do is sign up, hook up your brokerage accounts, and covester handles the rest.

From the prespective of the follower, Covester helps by confirming that all trades are accurately reported and the rate of return being calculated is correct.  I think this is an excellent option for people who don’t have the time to do the research and monitor their portfolio.  The follower only has to pay a fee when the traders’ portfolio makes them money.  It is a win-win for both the trader and follower.  The potential risk associated with this is that the trader can lose all your money.  But what makes the trader more trusting is that Covester is acting as the third party auditer and shows you their true trading and return history.  The trader can futher instill confidence in their followers by explaining their rationale for a particular trade on their Covester profile.  They also have the option of keeping a blog in which they can dicuss their strategy and views on how to deal with current market conditions.

I think Covester knocks down the barriers to investing by hoooking up potential “hedge fund” managers with potential investors, no matter how much money is involved or what your background is.  Other great features include the ability to network with other investors, ask succesful investors questions, track your own preformance against other top traders, and widgets you can place on your website to show off your portfolio performance.  The only grip I have about Covester is that I have been having a problem hooking up my account to my Zecco brokerage.  I think this techincal issue may be limited to Zecco, as it seems that Covester works for most other major brokerages.

My Covester Widget: