What's Next?

The Path To Managing Money

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

Is Your Marketocracy Fund Beating Your Real Portfolio?

Managing your Marketocracy model portfolio is an excellent way to develop your investment skills without risking your capital.

But, when your Marketocracy model portfolio starts to outperform your actual portfolio, its time to put real money into your investment ideas. We have the tools to deliver the results of your Marketocracy model portfolio for you and your family right now.

In order to make it easy for you to start to invest real money in your Marketocracy model portfolio, Marketocracy Capital Management, LLC (MCM), our affiliated registered investment advisor, has reduced its minimum separately managed account (SMA) size to $20,000 for you and your friends and family.

In addition, opening an SMA account will start a GIPS® composite, a real-money track record that can open doors on Wall Street and make it possible for us to market your model to our clients at some point in the future.

What Is The Deal?

Because the GIPS® composite needs to reflect a normal client's experience, your account must pay the same fees as would any client. At present, for accounts less than $250,000, MCM's annual management fee is 1.50%. In addition, FOLIOfn -- the brokerage firm where your account will be domiciled -- charges a brokerage fee of 0.40% with an annual minimum of $200. Of course, if you would like to invest more than $250,000 in your model portfolio, the fees would come down.

Who is FOLIOfn?

  • Independent brokerage firm that enables trading portfolios of stocks called folios
  • 24x7 access to view your holdings
  • FOLIOfn takes custody of your account and provides SIPC insurance

Why FOLIOfn?

We use FOLIOfn because their fee structure and the ability to hold fractional shares enables us to match your model's performance very closely. It also enables our clients to make deposits or withdrawals in small amounts.

Example: Say your portfolio has 20 positions in it. If you add $1000 to your account you would need to make 20 trades to keep the account in sync with your model. If you paid $10/trade, your commissions would be $200 or 20% of your transaction.

If you are currently paying retail commissions and fees to manage your own brokerage and/or IRA account, its possible that this account will save you money and open up a new career option for you at the same time! If your Marketocracy model portfolio has outperformed your brokerage or IRA account, you may even get better returns.

How Do Actual Returns Compare To The Model?

Since your track record, up to now, is for a model portfolio, prospective investors want to know how their returns will compare. This chart is for just one manager's model, but it is representative of several key features of all of our composites.

  • The light blue line is the model portfolio and the dark blue line is the performance of client accounts computed in accordance with GIPS®
  • The portion of the chart before the dark blue line starts is the manager's training period. No client assets where put at risk during this manager's training
  • If the dark blue line is above the light blue line, it means that clients have done better than the model
  • Since the Composite pretty closely matches the model (with a slight bias in favor of the client) it means that the data for the model portfolio is useful for manager selection and evaluation purposes
  • The table of information and the footnotes are required to make it a GIPS® compliant presentation

About The GIPS® Composite

GIPS® stands for Global Investment Performance Standard. The standard exists to provide clients and prospects confidence in the integrity of performance claims and the ability to compare performance across different firms. In addition, results reported in accordance with the GIPS® standards generally comply with SEC rules for advertising performance. Your Marketocracy model portfolio returns are not GIPS® compliant, so our ability to market your model is greatly constrained. However, your model's returns can be included in marketing presentations as supplemental information to a GIPS® composite.

How Can The Composite Do Better Than The Model?

Our goal is for the composite to match your model's returns. However, the model return is after deducting a management fee of 1.95% and trading commissions of 5 cents per share. At FOLIOfn, the smallest client will pay a total of 1.90% combined management and brokerage fees. This means there is a slight bias in favor of the client. The bias is larger for models that require a lot of trading and for larger client accounts that pay lower fees.

Friends & Family

Inside every family and social circle there is one person everyone goes to with questions about investments, and you probably are (or should be!) that person.

But, lets face it, being an unofficial advisor is a thankless job. If you talk about a stock that doesn't do well, you can bet that those who bought it will not let you forget it even if your other stock picks did well. People have a long memory for your losers and often forget to give you the credit for your winners.

To do a great job for your friends and family they need an easy way to buy all of the stocks in your model portfolio instead of just cherry pick your ideas and then relying on you to tell them when to sell.

When you start your SMA account, we will set up a web page where your friends and family can see your track record and make it easy for them to follow all of your recommendations by investing alongside you. Click here to see an example.

We have the data to present your model, it's track record, and your GIPS® composite in their best light. But, it will be up to you to describe your investment strategy, provide commentary as often as you see fit, and to tell everyone who is already following you informally through your various social circles (Facebook, LinkedIn, Twitter, etc.). As a reminder, to make it easier for your friends and family to help you get started, MCM will reduce the minimum account size for them to $20,000.

What's In This For You?

U.S. laws make a distinction between investment advisors and publishers of investment newsletters. Investment advisors are generally required to comply with registration requirements at both the federal and state level. Publishers of investment newsletters, however, are generally not considered to be investment advisors, and therefore do not have the same registration requirements.

Our Masters Contract is designed to enable us to work with those of you who are not registered investment advisors. If you are a registered investment advisor, we can work with you under our Service Advisor Contract.

Our Masters Contract pays you to provide an investment newsletter for our clients which will consist of the daily portfolio holdings of your Marketocracy model portfolio. To deliver your newsletter, you need do nothing more than continue to manage your model portfolio on Marketocracy's website. We will pull the data we need directly from our database.

We use this information to run your model at FOLIOfn so that client's of MCM can choose it as an investment option in their separately managed accounts.

Your compensation for your investment newsletter service is 30 basis points annually on the assets invested in your model. This means that at $100 million in assets, your annual payment would be $300,000. At $10 million, it would be $30,000. At $1 million, $3,000.

The Services Advisor Contract pays you 25 basis points annually on the assets your clients invest in any of the model portfolios we have available on FOLIOfn, not just your own portfolio. This payment does not stack on top of the 30 basis points paid under the Masters Contract because that contract is designed for those who are not registered investment advisors.

Masters Contract

Services Advisor Contract

What Happens Next?

The last mutual fund company I started, Firsthand Funds, attracted $8 billion in assets at its peak, and we have more investment talent at Marketocracy than Firsthand ever did.

The reason I started Marketocracy was to find the rare managers, like you, who have the skill and passion to perform well for their families so we can offer our clients a better selection of managers than any mutual fund company can possibly hope to match. The ball is now in your court.

  • Do you believe in your investment skill enough to invest at least $20,000 in your own portfolio?
  • Are you willing to recommend your portfolio to those who know you best, i.e. your friends and family?
  • Do you want to be a part of a firm that selects managers because of their skill and not their pedigree?

If you can answer yes to these questions, I would be honored to have you on my team. If you want to discuss, please reserve a spot at one of the two conference calls we've set up to answer your questions.

Conference Call

I'm Ready To Start