The Cash Diaries

My experiments in passive income, trading and life

Are etoro’s CopyFunds Profitable

It’s over 6 months since eToro launched their CopyFunds financial product.  So we’re starting to get some good data as to whether these can be profitable investments.

I started my own experiment a while back to see if copyfunds would perform and I’ve embedded screenshots below.

What are CopyFunds

CopyFunds are a bit like hedge funds.  Funds are invested based on an underlying strategy.  Some copyfunds on etoro, group together a number of assets, such as Tech Stocks or Cryptocurrencies.  Others are made up of the trades of actual traders on the platform.  For example the “TrendingR7” copyfund, is made up of the 10 fastest gainers on the platform with a risk score of 7 or less.   When you invest in this copyfund, your money will be used to copy the trades of all the traders in the TrendingR7 fund.

Partner CopyFunds

Partner Copyfunds were launched a few months after and are managed by third parties.  These funds are based on a wide variety of strategies.  Note, if you’re a profitable hedge fund manager, and want a whole bunch of new clients, then this might be something to look into.

The Advantages of CopyFunds

I believe there are two major advantages of CopyFunds compared to traditional funds.  One, there is complete transparency.  You can easily see the past performance and what the fund is invested in.  Secondly, you can close out your position at any time.  There is no lock in or contracts.  That’s because copyfunds are invested using CFDs which are very liquid on the etoro platform.

How they’ve performed

Obviously each fund is different, but you can see a screenshot from my virtual account below.    The best performer so far has been the TrendingR7 account.  If you had invested $5k when I did, you would have made a $2k profit!  That’s nearly a 50% return which is pretty amazing.  The worst performing of my picks is the active traders portfolio.  But even that has gained 8% which is still ridiculous.

It’s obviously easy to be very bullish about this, but  I still feel like it’s early days.  I will obviously keep you updated as time goes on.

The future of CopyFunds

I’m sure we’ll see more partner copyfunds in the future and maybe some more funds operated by etoro.

So far, the technology seems to be working well.  I haven’t heard any horror stories about slippage or missed trades.  I would like to see the minimum investment amount reduced.   I do feel $5k is out of reach for many investors.  On the other hand, as your funds are potentially invested in thousands of trades, it does make sense that there is a quite high minimum.  I wouldn’t want to see the performance reduced.

You can find out more about copyfunds here.

 

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