This week we want to drill down on why opening an account with Folio Investing can save anyone who wants to invest in our clone portfolios time and money. If you missed our Folio Investing partnership announcement from a couple of weeks ago, you can find the press release here. Note to traders: if you would rather saw off your right arm than open an account with a broker that is not your current broker, please skip this article.
Folio Investing is a unique broker platform because it allows anyone to invest in a complete basket of stocks in whole dollar amounts (just like a mutual fund). To illustrate let’s take an example. If you wanted to invest in KO, GOOG and APPL at a traditional broker, you would need to specify the tickers you want to invest in, the number of shares you want to buy from each company and the type of order (e.g., market, limit, exc.) you want to place. With a traditional broker it is hard to be precise about what percentage allocation you want to give a particular position or even precisely how much you want to invest since you will always have to round up or down to the nearest whole share.
While Folio Investing allows you to place trades just like at a traditional broker, the platform also allows you to simply specify a basket of stocks you want to invest in, the amount you want to invest and the weights you want to allocate to each ticker in the basket. So using the same example above – all you have to do now is define the basket (GOOG, APPL, KO), the amount you want to invest (say $10,000 across all holdings) and the weights allocated to each holding (say 33.3% each to make the basket equal weighted). You can replace, add or subtract tickers and change/reset weightings at any time. That’s it! You never have to build another spreadsheet again to figure out portfolio weightings. Folio Investing calls this method “window investing” and it is perfect for investors who want to follow a disciplined investment strategy (read: any one of our clone portfolios) consistently and precisely.
The second reason Folio Investing is a perfect platform to use to invest in our clone portfolios is cost. Folio Investing offers a flat fee pricing plan that lets you make unlimited trades for a flat fee of $29 per month or $290 per year. To illustrate the cost savings let us use another example. Let’s say you wanted to invest $5000 each in 5 clone portfolios each having 10 holdings (50 holdings total). Let’s also assume that 20 holdings change quarterly across all five clones. With Folio Investing, to create and hold the 5 clones for a period of one year would cost $290 in brokerage fees. To hold the same clones at a traditional broker would cost nearly six times as much [50 buys at inception + (40 trades at each rebalance x 3 rebalance points)] x $10/trade = $1700. Maybe that’s not a big deal if you’re investing $250,000 but it is certainly a big deal if you’re investing $25,000.
The convenience and cost savings of using the Folio Investing platform makes it a natural fit for AlphaClone but we want to make it even easier. AlphaClone has creating a series of investable clone portfolios called AlphaClone Folios. These investable clones are based on both individual and fund group clones tracked on our platform. Best of all investing in AlphaClone Folios means you will not have to edit clone holdings and weightings yourself – we’ll do that for you automatically. We’ve already created AlphaClone Folios for our Tiger Cubs 10 Most Popular and Berkshire Top 10 Holdings clones – you can access them here for free (no fee to AlphaClone). Future AlphaClone Folios will require you be a paid AlphaClone member to access them.
Making it easy to invest in our clones is one a top priority for us. Our partnership with Folio Investing is just the first step. Please send us comments or feedback on how we can continue to make it easy for you to invest in our research.
