AlphaClone helps investors do their homework

December 9, 2008 | Camille Ricketts | Comments | |

AlphaClone, a web site that tracks investments made by prominent hedge funds and money managers, launched today to give other investors the insight they need to make good decisions of their own. Armed with the information found on the site, users should be able to virtually replicate the holdings of more than 230 high-profile funds — and then track their performance against a retinue of indexes and simulations.

For example, as a user, you can see that Warren Buffet’s 10 largest holdings have beaten the market by 10 percent on average every year since 2000. But AlphaClone doesn’t just track individuals. You can just as easily ask it to look up the most popular holdings from 20 funds managed by former members of now-closed Tiger Management and see that they have beaten the market by 12 percent every year since 2000, the company says.

Once you have a virtual “clone” of one of these portfolios (and the site already has more than 15,000 pre-made to choose from), you can backtest them to understand their historical patterns and watch how they perform going forward through daily updates. The same goes for customized portfolios of your own design. They are even rebalanced automatically at the end of every quarter when new filings are added to the system. The site charges a $99 monthly subscription fee to join, and the company says it should be intuitive enough for easy use by even casual individual investors.

AlphaClone is the latest in a long line of web-based smart investment tools, which also includes market-alert application Zignals, and social-investing sites Zecco, Marketocracy and Wikinvest. Perhaps the most similar is Covestor, a site that also lets you tap into buys and strategies devised by Wall Street’s trading elite.

With its simple interface and unique simulation-based spin, AlphaClone could prove to be an awfully handy (and popular) tool considering the shaky state of the economy — assuming the steep fee doesn’t scare cost-cutting users away. Founded by longtime investor Mazin Jadallah and money manager Mebane Faber, the site’s own funding history hasn’t been disclosed.

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About the Author, Camille Ricketts

Camille is the lead writer for GreenBeat. She came to VentureBeat from Google where she worked on its traditional platforms team, particularly in TV. Before that, she was a reporter for the Wall Street Journal in New York and London. Follow her on Twitter at @camillericketts, and follow VentureBeat on Twitter at @venturebeat.

With GreenBeat 2009, VentureBeat's all-star conference on all things Smart Grid, coming up in November, Camille will be expanding coverage of this exciting space. Stay up to date by following @greenbeat2009 on Twitter or by becoming a fan of the event on Facebook here.

  • alpha
    I see two faults in this business:

    1. How can average people clone the most successful hedge strategies, for example, high frequency trading ? (Ex: D.E.Shaw, Jim Simons), quant fund and statistical arbitrage ?

    2. Most hedge fund did poorly in recent financial crisis (including Citadel), when people need better investment strategies mostly.
  • Mazin
    Alpha, thanks for the comment. I encourage you to go register for a Free Guest Pass if you haven't already. To answer your first question, we DO NOT attempt to follow the proprietary trading strategies of fund managers. That's impossible to do without non-public information.

    Instead, we allow investors to follow the long stock ideas of some of the world's top fund managers. We then simulate thier performance had they invested in those stock ideas at the time they were made public. The objective is empower investors by allowing them to benefit from those stock ideas.

    Which brings me to your second point; actually, hedge funds as a category, while down this year are fairing better than the overall market year-to-date (http://www.barclaygrp.com/indices/ghs/Hedge_Fun...). In fact, hedge funds on average have consistently outperformed the broader market and we believe that they will be better positioned than most to take advantage of a recovery when it happens. There's never been a better time for a service like AlphaClone.