Social investment startup Covestor opens its arms to more aspiring portfolio managers

Covestor, a startup that lets people mimic other investors’ moves, is opening its doors and allowing anyone to become a portfolio manager on its investment management service. It will create many more investment options on the site for Covestor members because before, there were only 25 models that users could follow.
Becoming a manager on the site, of course, is contingent on a few conditions: you have to disclose all your real brokerage moves and share a year of performance history.
“We’re trying to bring the principles and practices of the Internet to finance and allow clients to pick what’s most appropriate for them,” said co-founder Perry Blacher. “As long as you’re willing to share your real investment activity and be transparent, then we’ll set you up with a level playing field.”
Covestor is part of a cohort of young startups that are trying to disrupt the traditional mutual fund industry, including MarketRiders, Cake Financial and Kaching. Kaching has a broader, more consumer-oriented focus with a lower minimum investment at $3,000 while MarketRiders is more hands-on for wealthier investors that want to watch over their portfolio allocations directly. Covestor’s minimum starts at $10,000 and annual fees range between 0.5 and 1.5 percent.
Blacher says Covestor’s strategy reflects its East Coast and London-roots: it targets professional funds and clients.
“We’re out to compete with Fidelities and Putnams of the world,” he said. “We are after a more experienced older and wealthier crowd, instead of the Facebook-Yahoo types.”
Covestor has raised $7.5 million in two rounds of funding from Union Square Ventures, Boston-based Spark Capital and London based Amadeus Capital Partners.