Titan Invest Review 2019 – Hedge Fund Strategy for the Small Investor
Titan Investing Review – Expert Analysis of Hedge Fund Investment App
Titan Invest launched with a splash to help the little guy or gal invest like a big-time hedge fund manager. This Titan Invest review digs into every corner of the app, including the strategy and app design. As a former portfolio manager, I put Titan under the microscope, investigated the features, and compared the Titan app against other robo-advisors.
The company’s unique selling proposition is that Titan investors have a chance to compete with the formerly inaccessible hedge fund players. Here’s how to understand a hedge fund investment.
What’s Hedge Fund Investing?
A hedge fund employs a variety of investment strategies with the goal of earning alpha, or above market investment returns. Frequently hedge funds use leverage and derivatives. Hedge funds are predominantly available to accredited investors (those who have a high net worth and or income).
Titan Invest is breaking down the hedge fund wall, providing access to any investor with $500.
Titan Invest Founders
Clayton Gardner is Titan’s co-creator along with co-founders Joe Percoco and Max Bernardy. They couple real-world investment experience with prestigious degrees from UPenn’s Wharton School of Business and Stanford University. All three have worked at hedge funds, and they have raised $2.5 million in seed funding from Y Combinator and other top venture capital investors.
- Titan Investing Review – Expert Analysis of Hedge Fund Investment App
- Titan Invest Features and Fees
- Who Benefits from Titan Invest?
- How Titan Works? Titan’s Investment Strategy
- What are Titan’s Fees and Minimums?
- Is Titan Invest Safe?
- Titan Invest Performance
- Titan Invest AUM
- Titan Invest App
- Titan Invest Content
- Titan Invest Pros and Cons
- Titan Invest Review and Comparison
- Titan Invest Review Wrap Up – Is it Worth it?
Titan Invest Features and Fees
|Overview||Hedge fund-like robo-advisor with low minimum investment.|
|Minimum Investment Amount||$500|
|Fee Structure||1.00% of AUM * (see promotion)|
|Top Features||Analyzes thousands of investment filings every quarter to identify and invest in the 20 top long-term holdings of the most successful hedge funds. Provides investors with a personalized hedge based on their risk tolerance, aiming to mitigate losses in major market downturns.|
|Free Services||*No-fee investment management for life after four friends sign up. Free-to-download app for iOS and Android.|
|Contact & Investing Advice||Direct access to their investment research and customer support teams via email, phone, and in-app chat.|
|Investments||20 U.S. stocks plus a personalized hedge.|
|Accounts Available||Individual investment accounts. Retirement and joint accounts coming soon.|
|Promotions||*For each friend you refer, you both earn 0.25% off your Titan fee. Refer four friends and earn no-fee investing for life.|
Who Benefits from Titan Invest?
Titan Invest might be a good fit if you’re aiming to beat the market over the long term (i.e. many years). One of Titan’s main objectives is to deliver outstanding long-term investment returns (net of fees) in excess of the stock market average.
Titan Invest might be for you if you’re a small investor and want to get started investing in the financial markets with as little as $500.
Titan is built for the investor interested in actively managed investing strategies.
Titan investing might be for you if you have a passive investment portfolio, either with another robo-advisor or on your own and want to dip your toes into active investing. Titan could be a great way to try out hedge fund investing for the long term.
How Titan Works? Titan’s Investment Strategy
The Titan investment strategy invests each investor’s money in two ways. The first is the core 20 stock investment portfolio. The second is a hedge security which aims to hedge against large losses in your Titan portfolio during market downturns.
Titan Review of Stock Selections – How Titan Identifies Portfolio Holdings
SEC rules require large hedge funds to report their holdings quarterly. While these filings often can offer great insights, for many reasons they can also be misleading and filled with pitfalls for casual readers. Titan’s proprietary algorithm analyzes investment activity across thousands of hedge fund filings, ultimately only filtering insights from about ~5% of the total pool.
The Titan hedge fund investment algorithm filters through these filings by examining a host of factors ranging from turnover (how long a hedge fund owns a stock, on average) to concentration (how many stocks a hedge fund owns, on average).
After this extensive filtering process, the algorithm returns the 20 stocks that the Titan portfolio is invested in.
These stocks are updated and rebalanced once a quarter, with about one or two changes being made on average each quarter.
Titan believes that the companies its algorithm invests in share common characteristics:
- Wide moat – this makes it difficult for competitors to enter their market.
- Strong cash flows.
- High returns on capital.
- Excellent management teams.
- Attractive growth potential.
Titan’s goal is to invest in businesses with the highest chance of delivering strong long-term returns.
Personalized Titan Hedge Investment
Titan Invest hedges part of your investment according to your individual risk tolerance. Your risk tolerance is determined by a number of factors, including your investing time horizon, investing experience, net worth, income, and more.
Generally, more aggressive investors tend to be okay with greater volatility in order to achieve higher long-term returns, while more conservative investors prefer smaller ups and downs in their investment values (even if it means lower long-term returns).
Each Titan investor will have a unique percentage of their portfolio invested in its core stocks. The remainder of your investment will be in the personalized hedge.
The Titan hedge works by investing in an inverse S&P 500 ETF. Here’s how the dynamic inverse S&P 500 ETF works:
- Part of your money is invested in an ETF that effectively “sells short” the S&P 500.
- The hedge aims to rise in value when the market drops in value.
Should the S&P 500 stock market index continue to grow, the hedging strategy would likely incur losses and temper the portfolio gains from the stock portion of the portfolio. However, if the stock market took a major dive, the hedging strategy would more likely yield investment gains, tempering losses from the stock portion of the portfolio.
It’s a way to achieve diversification without owning bonds or other non-stock investments.
This might sound a bit complicated, but actually it’s quite simple. Titan is investing a portion of your money in 20 U.S.-listed stocks. The remainder is invested in an investment that aims to cushion the blow if or when the stock market falls.
Consider your Titan fund investment as a portfolio with two distinct buckets: the first contains 20 equally-weighted stocks, and the second is an ETF that effectively “shorts” the overall U.S. stock market.
We think this is an interesting strategy, with potential to beat the market in the long run.
Is Titan Invest a Hedge Fund?
No – Titan doesn’t pool your money with other investors, which is common in typical hedge funds. Your money remains separate in your own account. Titan also doesn’t charge a large performance fee when the fund beats a certain benchmark, like most hedge funds.
Yet, you might think of Titan as a hedge fund because it does effectively “short” the stock market index to dynamically hedge your stock market exposure. Also, Titan replicates the stock selections of successful hedge funds.
What are Titan’s Fees and Minimums?
Titan’s fee structure is simple. The platform charges 1.0% of assets under management. That means if you invest $500, then you’ll pay $5.00 per year. Invest $10,000 and you’ll pay a fee of $100 per year.
Unlike typical hedge funds, there isn’t a performance fee. When your Titan investments go up, you keep the profits (net of the 1.0% management fee).
The 1.0% management fee is on the high end of the robo-advisory spectrum. However, Titan aims to outperform other robo-advisors net of its fee. It also keeps its investors informed and engaged through regular research and updates. Also, the generous Titan referral promotion softens the fee substantially.
The minimum investment amount with Titan is $500.
Titan Invest Promotion
Subtract 0.25% Off Your Fees for Each Referral (Refer Four Friends = 0% Fees)
For each friend you invite to Titan who joins, you both get 0.25% off your 1.0% management fee.
If you sign up four of your friends, then your management fees are eliminated – for life. That is an amazing deal. We’ve never seen a promotion this generous.
Is Titan Invest Safe?
Titan Invest is a registered investment advisor and bound by the legal requirements of the Securities and Exchange Commission (SEC). All accounts are SIPC-insured up to $500,000.
The accounts are held and cleared through Apex Clearing, one of the leading financial technology custodians.
The Titan Invest app protects all your personal data and financial information with SSL and 256-bit encryption.
Note that investments in stocks are subject to principal risk (you may lose part of your investment if you sell after a stock’s value declines).
Read on to find out how the robo-investing app has performed so far.
Titan Invest Performance
While investors love to read about robo-advisor returns and performance, we advise against making investment decisions based upon past performance.
Titan launched less than two years ago, a very short time period over which to evaluate performance. Although interesting, even longer-term performance data should be viewed with caution as the past does not determine tomorrows returns.
Okay, now that you’ve received our warning, here’s the Titan investment performance data since inception in early 2018. See the end of this review and Titan’s website for full performance disclaimers.
Titan’s returns since inception have been strong.
From its launch date of February 20, 2018 through May 31, 2019, a hypothetical Titan client with an aggressive risk profile would have returned more than the S&P 500.
The Titan client would have earned a 6.4% internal rate of return in comparison with the S&P 500’s 3.1%. The 3.1% alpha (adjusted for beta, which is commonly known as “market exposure”) demonstrates the superior performance of the Titan Invest app over that of the S&P 500. Similarly, Titan’s Sharpe ratio suggests greater returns for the amount of risk taken compared to the S&P 500. Again, please see the end of this review and Titan’s website for full performance disclaimers.
Sourced from the Titan Website: All performance results are net of fees and include dividends and other adjustments. 2019 YTD results are from 1/1/19 through 5/31/19. 2018 results are from Titan’s launch date of 2/20/18 through 12/31/18. All-Time IRR, alpha, beta, and Sharpe ratios are from Titan’s launch date of 2/20/18 through 5/31/19. All-Time IRR is the actual internal rate of return. Alpha is calculated using the Capital Asset Pricing Model (CAPM) and uses a risk-free rate of 2.09%, which was the average 3-month Treasury Bill rate during the period. See full disclosures on Titan’s website.
Titan Invest AUM
After just over one year in operation, Titan’s assets under management (AUM) and number of accounts is impressive. Titan’s AUM is published quarterly in the SEC mandated ADV form.
As of early April, Titan Invest had over $25 million invested with the firm and over 5,000 client accounts. That averages out to about $5,000 invested per account. For comparison, check out our Robo-Advisors With the Most Assets Under Management.
Titan Invest App
The Titan iOS and Android apps are geared for simplicity. They are available in the Google Play and iTunes stores. The sign-up process is quick and within a few minutes you’re invested in a basket of high-quality stocks for the long term.
Although Titan replicates hedge fund investments, the strategy does not seem particularly speculative or aggressive. You’ll be investing in many high-quality companies.
Titan Invest Content
The Titan Research portal includes updates and analyses on the Titan investment portfolio holdings and other stocks and investment topics. Titan recently published detailed analyses of Amazon, Alphabet (Google), and Apple, all holdings in the Titan investment portfolio (at the time of publication).
Titan also does a research analyst quality study of specific stocks. The 20-page Facebook Deep Dive PDF stacks up well against a high-priced research report you might get from an investment bank.
Even if you don’t invest with Titan, some of the research they publish is free and available on the website.
Titan Invest Pros and Cons
Invests in high-quality stocks for long-term wealth building.
Titan Investing Content – The Titan research is thorough and comparable to expensive research reports. Their education portal is superb.
Titan Invest’s investment strategy has the potential to beat the market over the long run.
The opportunity to refer four friends and receive no-fee money management for life is a true cost-saver. Even with just 2-3 friend referrals, you’d lower your fee to the same level as most passive robo-advisors.
Direct access to their Investment team and Customer Support team is available through email, live chat, and phone.
Syncs with Mint, Personal Capital, and TurboTax.
The major disadvantage of Titan is the 1.0% AUM fee. Most robo-advisor platforms, even those that are actively managed, charge less than 1.0%. There are even lower-priced platforms that provide investment management and financial advisors such as Wealthsimple and Ellevest.
Titan is a new investment app and thus has a short evaluation window to date. It’s difficult to judge an investment methodology in the short term. However, this will be remedied as the platform gains further traction.
Titan Invest Review and Comparison
The Titan Invest platform is unique, so all comparisons should be viewed through that lens.
When comparing with a typical hedge fund, Titan Invest is more affordable and transparent.
Comparing Titan Invest with other robo-advisors is a challenge.
The first hedge fund robo-advisor, Hedgeable, recently closed its doors to retail investors. Thus, for investors seeking an active hedge fund robo-advisor with a low minimum investment amount, Titan doesn’t have many competitors.
Most robo-advisors follow a passive, index fund-based investment strategy. We aren’t aware of any robo-advisors that have Titan’s investing approach.
It’d be appropriate to compare Titan against other actively managed robo-advisors, but not many exist. And, each actively managed robo-advisor offers their own strategy, highlighting the difficulty of comparison.
M1 Finance comes close as a “DIY” investing / trading platform. It has a hedge fund-type portfolio investment option, although it simply copies hedge fund filings verbatim instead of cleansing the filings according to specific long-term focused factors like Titan does. The basic M1 Finance investment option is free.
Personal Capital uses several active strategies, and also offers financial advisors for an 0.89% AUM fee.
Ultimately, a Titan Invest comparison is difficult, due to its unique investment style.
Titan Invest Review Wrap Up – Is it Worth it?
Titan Invest’s mission is two-fold:
- Grow your capital at a high rate of return over the long term.
- Empower you to become a better investor.
It’s too soon to evaluate whether Titan has achieved its long-term objectives.
What we like is that the investment approach is sound and easy to understand. Choosing top stocks based on what the world’s best investors own, filtered by profit- and quality-focused metrics, seems like a reasoned investment approach. Hedging the portfolio with a “short” fund may also make sense for the more conservative investor.
How the approach plays out over the long term remains to be seen.
The 1% management fee is high when compared with other robo-advisors. Yet Titan aims to outperform other robo-advisors net of its fee. Also, the opportunity to reduce or eliminate the fee for life by referring four friends is compelling.
The low minimum investment amount of $500 makes dipping your toes into the Titan hedge fund investment approach accessible to many.
All in all, we like Titan as a supplement to your other investments. For investors seeking the opportunity to beat the market, this is a viable option. Plus, the performance record to date is impressive.
As a reminder, all investments in the financial markets are subject to risk as investment values go up and down.
This is a sponsored post with Titan Invest (“Titan”). All opinions are our own. This is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services. Titan uses a proprietary algorithmic strategy in selecting recommendations to advisory clients. Please see Titan’s website (https://www.titanvest.com/) and the Program Brochure (available on the website) for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Titan’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Titan’s registration as an SEC registered investment adviser does not imply a certain level of skill or training and no inference to the contrary should be made. Nothing here should be considered as an offer, solicitation of an offer, or advice to buy or sell securities. The above content is for illustrative purposes only to demonstrate products, services and information available from Titan. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections, are hypothetical in nature and may not reflect actual future performance. Performance results are net of fees and include dividends and other adjustments. 2019 YTD results are from 1/1/19 through 5/31/19. 2018 results are from Titan’s launch date of 2/20/18 through 12/31/18. All-Time IRR, alpha, beta, and Sharpe ratios are from Titan’s launch date of 2/20/18 through 5/31/19. All-Time IRR is the actual internal rate of return. Alpha is calculated using the Capital Asset Pricing Model (CAPM) and uses a risk-free rate of 2.09%, which was the average 3-month Treasury Bill rate during the period. All performance figures represent performance of a hypothetical account created on Titan’s inception date of 2/20/18 using Titan’s investment process for an aggressive portfolio, not an actual account. All Titan performance results include the use of a personalized hedge for a hypothetical client with an “Aggressive” risk profile; clients with “Moderate” or “Conservative” risk profiles would have experienced lower returns. Please visit https://support.titanvest.com/investment-process/hedging for full disclosures on our hedging process. See Titan’s website for full performance disclosures.
Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.