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Frequently Asked Questions

Why should I join Covestor?

If you are actively managing your own money, you know how much hard work and insight it takes to be successful. Covestor is unique in allowing you to follow proven self-investors putting in the hard work.

If you choose to share your portfolio, as well as track others, Covestor offers you further recognition and financial reward. It gives you tools you can use to monitor your investments, measure your performance against a peer universe, and keep a record of your analysis. What's more, you get all these benefits free of charge.

Do I have to share my portfolio?

No. You can use Covestor if you simply want to follow other great self directed investors. Members not sharing their portfolios still have a watchlist and a blog in their account where they can keep track of, and get feedback, on their analysis.

You can add a portfolio at any time. Your track record only begins from the date you do this so the sooner you get going the longer a head start you will have in building your following and ultimately earning fees.

How is Covestor different from other stock discussion sites?

Covestor is not a bulletin board or fantasy trading game, it's all about actions. Covestor is about real-trades, real people and real results - where you can both build your credibility and see what other real people are doing to achieve their goals. Secondly, it's about helping people make more money by leveraging the hard work that is already being done. Of course, discussion is part of the investment process.

Many of our members also have their own stock blogs and are active on discussion sites. Our role is not to replace that, but to help add trust to what they are saying elsewhere.

Who can become a member of Covestor?

Anyone can become a member. Registration is easy and free, you simply have to select a username and password to create an account. The individuals sharing portfolios on Covestor are serious personal investors anywhere in the world who have been managing their own funds, and meet our criteria for performance and experience. If you have concerns about the skills or experience of other members, please contact us support@covestor.com

What kinds of investments does the site cover?

Covestor currently supports long and short equity investments including Mutual Funds and Exchange Traded Funds (ETFs). Covestor covers investments worldwide so long as they can be exchange purchased. We plan to add other asset classes such as Options, Futures and Foreign Exchange in the future.

Why should I share my real trades with anyone else?

Trades are only reported post execution. There is no price impact or disadvantage in sharing your trades once you have taken your position. Conversely, sharing your decisions helps to build trust and recognition. If you are secretly building a position in an illiquid stock over time and don't want disclosure, we recommend at this time you carry out that strategy in a different brokerage account, it will not be reported but will consequently not count towards your track record and performance.

Why should I let other members know the value of my holdings and my net worth?

Covestor never reveals the size or valuation of any trades or holdings. All account information is normalized. Only you ever know your net worth. Members tracking your portfolio will only be able to see the proportional percentage allocation of your positions and a guide to whether you have a small, medium or large portfolio.

Is the broker link really secure?

Yes. We are obsessed with security. Our secure broker link uses the same technology as the leading online banking sites and global financial institutions.
( http://corporate.yodlee.com/customers/clients.htm )

The link is used only for purposes of populating and updating your Covestor account. The security infrastructure ensures your details are kept fully secure. (See our Security Policy.)
( http://corporate.yodlee.com/technology/security_overview.htm )

Why can't I select which trades to report?

The integrity of our service and the value to all members depends upon our offering an accurate, unbiased and complete record of an individual’s activity within a single brokerage account, and reporting the transactions at the time of trade, not retroactively.

Why should I bother to add a rationale to my trades?

Everyone recognises that positions can move against you as well as for you so you are invited to share your rationale. All comments are time stamped so members can build trust in your decision making over time. Good insight and sound rationale backing up real decisions are often more important than short term fluctuations of performance in building reputation.

What if I have a number of portfolios with different strategies?

So long as the funds are in separate brokerage accounts, you can have a number of Covestor accounts with different themes, and have them measured against different benchmarks. For instance you may already have one portfolio with your broker for your retirement savings and another portfolio you use for opportunistic investment in a sector you’re following.

Why should other members pay to track my account?

Serious self-investors know how much research and analysis it takes to be successful. They, above all people, recognize the benefits of leveraging your hard work - particularly when you have a track record showing you can do as well as the professionals. We passionately believe that there is no reason why dedicated individuals shouldn’t give the institutions a run for their money and be rewarded if they do an equally good job.

When do I start making money from sharing trades?

Covestor plans within the next 12 months to introduce the capability for members to generate a data fee from each account that tracks your investments.

Will I be contravening any SEC regulations?

No. Covestor has worked closely with regulatory attorneys in both the US and major European markets and is designed to remain open to all participants regardless of their regulatory status. Please read the Terms and Conditions carefully. Covestor is an information sharing service, designed for participants to disclose their information and eventually to be paid for that information. Legally this is a similar to how a publisher may be paid for providing news. The information about your trading activity is to help inform other investors as part of an array of data sources they may use in their decision-making process.

How does Covestor make money?

Covestor will make money when one member pays to track the account of another. Covestor only makes money when members make money. Like a standard managed account with a brokerage firm, investors will pay a management fee to invest their funds in a managed account, supervised by a regulated investment advisor, that in turn pays a data fee to the member being tracked

How do I know that someone I am tracking isn't just building a position here and dumping it somewhere else?

Covestor takes every precaution to prevent system abuse. We monitor transactions in stocks with limited liquidity, which risk manipulation, and members who advocate such positions. Covestor will eject members for inappropriate behaviour and for serious abuse members will be reported directly to the regulators. We are continually improving our flags to highlight the risk in replicating transactions or strategies.

What calculations are being used to measure my performance?

Covestor uses the GIPS (Global Investment Performance Standards) as a guideline for calculating the performance and risk measurements of individual portfolios. GIPS are the standard measure of accountability and reporting for leading investment management companies worldwide, designed for comparative measurement of the performance of portfolio managers. Covestor members are not fully GIPS compliant as they are not regulated investment managers. If you have any further questions regarding the formulae applied please contact us.

How often are performance calculations and rankings updated?

All performance metrics are updated once a day, after market close. All other metrics are instantly updated on the site as soon as a trade notification is received via the broker link.

What if I decide I want to remove my data?

You can remove your portfolio at any time. We will immediately disconnect your broker link and take down your performance and trade data. Your account will be downgraded to that of a member not sharing a portfolio (i.e. you can still follow anyone on the site). To do this please contact us at support@covestor.com.

What is the number that appears after a members name e.g. John Doe [21]?

The number after the member's name gives you an indication of that member's influence and popularity within the community. The number refers to the total 'follower months' this member has been followed on Covestor: that is the cumulative months for which this member has been tracked by others since joining. For example, If 25 members track a member for three full months that member will have accumulated 75 total follower months.

Details of the breakdown of who has been tracking and for how long can be found in the member's “Follower's” page. The statistic is updated daily. (A month is defined as 30 days and partial months are rounded down).

What are the stars that appear after a member name e.g. John Doe [21] ?

Stars are an indication of an individual's performance relative to the market. Each star indicates the number of consistent quarters that a member has outperformed their chosen benchmark.

To earn a star a member must have outperformed their chosen benchmark for a period of three consecutive months. Continued outperformance for an additional three consecutive months will earn them another star. If in the following quarter they fall below the cumulative return of their benchmark it will result in the loss of one star. Once they reach four stars they achieve 'Superstar' status which is retained for 12 months.

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