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Perfect System Trading Pitch by Covestor

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Want to see a perfect pitch of system trading? Read this on web site.

Of course, it’s perfectly crafted PR message by PR people. They don’t call it system trading either. But the concept is the same: pool trading talent globally, evaluate it and make it available to every investor.

A few qoutes:

Covestor CEO Perry Blacher said, “Our vision has always been to use the power of the Internet to discover hidden investment talent. We believe we will have more managers on the service than work for any professional firm by the end of 2010.”

“Unlike Fidelity or Merrill Lynch, we are not constrained by the managers we hire. The power of the Internet is in being open,” Blacher continues. “Rather than imposing a selection process, we believe that the future is about transparency and giving clients tools to put them back in control.”

“Covestor Investment Management (CVIM), an SEC registered investment advisor, provides the world’s largest web based money management platform. It offers clients a managed account service, previously only available to those with millions of dollars invested with a wealth management firm, where one can mimic the moves of any brilliant self-directed individual or professional investor.”

Enough said. Related link to Covestor Investment Management is here.

It just seems that Covestor gets everything right. From concept, to marketing, to tackling legal issues related to investment management.

Regarding regulation, just check the wording:
Unregulated individuals do not manage third party funds, but sell their trading data to CVIM. CVIM may use that data at its sole discretion to manage its clients’ funds based on their suitability.

Brilliant, isn’t it? 🙂

There are still shortcomings. First of all, only 63 trading systems (Covestor calls them “models”) as at the time of writing. Then, it’s limited only to stocks. System (i.e. model) analysis tools are non-existent beyond simple groups by investment style (macro, event-driven etc.). Lack of analysis tools is nothing of importance while there are only 63 systems, but the issue will become critical as the number of systems grows as I’m sure it will.

I look at Covestor as an excellent example of well-managed web-based company (possibly with synergy from venture capital investors at work in the background) in a business niche which is going to expand exponentially.


Written by A.S.

May 21, 2010 at 9:16 pm

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