Investing With Marketocracy

Frequently Asked Questions

My mission is to run an investment firm where managers are selected for their skill not their pedigree. -Ken Kam

What Is Marketocracy?

We believe people should have to prove themselves before they can manage other people's money and the best evidence of investment skill is a track record. We ask everyone who would like to manage money, either for themselves or for others, to first manage a virtual portfolio at portfolio.marketocracy.com until their track record tells them they are ready to invest real money into their virtual portfolio. At that point, a real-money GIPS track record is started and the manager is able to invite friends and family to coinvest in the portfolio.

The managers what we write about for Forbes are the creme of the crop. Generally speaking, they have outperformed most if not all of the mutual managers in Morningstar's database.

What Is The Fund's Symbol?

Our managers are available to clients of Marketocracy Capital Management's (MCM) Separately Managed Account (SMA) program. The Fund Symbols you see in our Forbes articles and in the performance rankings at www.mytrackrecord.com are not mutual fund symbols, but they are used in the same way to enable SMA clients to identify the fund/portfolio in which they would like to invest.

How Is An SMA Different From A Mutual Fund?

An SMA is like a mutual fund that is built to serve just one person -- you. You can choose the managers for your SMA to suit your preferences for investment styles, time horizons, and level of risk. You will have information for each manager that you need to replace them when you see fit, or allocating them more capital when they are performing.

How Do I Open A Separately Mangaged Account?

If you reside in the U.S., the first step is to complete a Client Agreement. The Client Agreement gives us authority to create a client profile at FOLIOfn, a third party brokerage company unrelated to Marketocracy. Additionally we will open an appropriate account in your name at FOLIOfn. We act only as your Advisor on record with FOLIOfn.

You can decide on a manager on your own if you’d like, or we can talk about it together and you can come up with one or more managers with our help. Once that decision is made, the appropriate amount of your account is invested in your SMA that twice a day synchronizes to the chosen managers' virtual fund(s), thus capturing any trading activity twice a day. When the manager trades, your account synchronizes to it automatically. You will see separate SMA subaccounts for each manager you select. You can view all activity, holdings, and other information provided by FOLIOfn.

We are not able to open an SMA for residents of other countries at this time.

What Are The Minimums And Fees?

The minimum account is $20,000. The fee consists of two parts. First is the Fee we get as your advisor, the second is the fee paid to FOLIOfn for their brokerage services (unlimited window trading). This fee includes all of your trading costs as we only trade through the two available window periods each day. It is an annual fee that is charged monthly based on your Average Daily Balance. Both fees are computed, and collected by FOLIOfn. Both fees are reduced at certain assets levels as indicated in the following schedule:

Account Value MCM Advisor Fees Brokerage Fee Total
$20,000 - $50,000 1.50% $100 1.50% + $100
$50,001 - $250,000 1.50% 0.40% 1.90%
$250,001 - $500,000 1.40% 0.30% 1.70%
$500,001 - $1,000,000 1.30% 0.25% 1.55%
$1,000,001 - $2,500,000 1.10% 0.20% 1.30%
$2,500,001 and up 1.00% 0.15% 1.15%

FOLIOfn does charge for certain extra items like paper statements, wire transfers, paper checks, etc.. These fees are rare, and are usually the result of a client-initiated action. Here is a list of these service fees.

What Is The Difference Between A Marketocracy Model And An SMA Composite?

Marketocracy Model refers to the virtual fund that was created and is managed by a member at portfolio.marketocracy.com. While we have thousands of Marketocracy Models, only a handful are chosen to have real money follow them in an SMA, or Separately Managed Account. This managed model fund is the fund we monitor for trading activity. All real money clients that have chosen to follow a specific Model are grouped together into a composite of those accounts according to GIPS standards.

Are These Returns Real?

The returns seen are real. The long-term statistical information available on all of our model funds were derived through the compilation of real market transactions captured through Marketocracy’s Portfolio Simulation. While the model funds do not use real money, they do use verifiable real trading activity.

Several of our longest established SMA accounts have GIPS compliant materials that show and refer to the Masters SMA Composite, the composite consists of the real asset clients that have chosen to follow that particular master. These masters have a GIPS Fact Sheet available on our website. The GIPS Fact Sheet contains a GIPS compliant composite disclosure document. We claim compliance with the GIPS standards.

What Is GIPS

GIPS stands for Global Investment Performance Standards. Information can be found here.

Here is some text from gipsstandards.org website;
“As an investor, you can rely on the performance presentations given to you by GIPS-compliant firms. Claiming compliance with the GIPS standards demonstrates a firm-wide commitment to ethical best practices and that the firm employs strong internal control processes.

What Do The GIPS Standards Provide You?

  • Confidence in the integrity of presentations from compliant firms
  • The ability to compare performance across different. If a firm does not comply with the GIPS standards, you might want to explore why the firm has chosen not to comply.”