I started my own experiment a while back to see if copyportfolios would perform and I've embedded screenshots below.
What are CopyPortfolios
CopyPortfolios are a themed investments. Portfolios are invested based on an underlying strategy. Some copyportfolios 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” CopyPortfolio, is made up of the 10 fastest gainers on the platform with a risk score of 7 or less. When you invest in this copyportfolio, your money will be used to copy the trades of all the traders in the TrendingR7 portfolio.
Partner CopyPortfolios were launched a few months after and are managed by third parties. These portfolios are based on a wide variety of strategies. Note, if you're a profitable hedge portfolio manager, and want a whole bunch of new clients, then this might be something to look into.
The Advantages of CopyPortfolios
I believe there are two major advantages of Copyportfolios compared to traditional portfolios. One, there is complete transparency. You can easily see the past performance and what the portfolio is invested in. Secondly, you can close out your position at any time. There is no lock in or contracts. That's because copyportfolios are invested using CFDs which are very liquid on the etoro platform.
How they've performed
Obviously each portfolio 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 CopyPortfolios
I'm sure we'll see more partner copyportfolios in the future and maybe some more portfolios 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 portfolios 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 copyportfolios here.
Disclaimer: eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results.
Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.