Top general questions

  • Why has Covestor changed its name?

    Covestor is part of the Interactive Brokers Group. The use of a new business name reflects this. There are no changes to our values or services, even though we look different under our new name.

  • Why does IB Asset Management no longer support trial accounts?

    We have discontinued the trial feature from Oct 2017. We believe that it was not adding enough value, over becoming a client, to justify itself. We would encourage potential clients to try IB Asset Management for real.

  • How do I submit feedback?

    Visit our contact us page for feedback options.

Top managing a portfolio questions

  • Do I have to be a Registered Investment Adviser to become a Portfolio Manager on IB Asset Management’s marketplace?

    Yes. You need to be a Registered Investment Adviser (“RIA”) or a Registered Hedge Fund Manager.

  • How much can I earn?

    We do not impose limits on the amount of compensation you may earn on our platform but your compensation depends on the number of IB Asset Management clients and assets they decide to invest in your portfolio. We pass on to you most of the management fees we charge to IB Asset Management clients investing in your portfolio. On standard portfolios, we keep 0.25% of the fee and pass the rest on to you. On portfolios that charge performance fees, we retain 2% of the 2%-12% charged to clients of their investment’s net positive performance.

  • Does IB Asset Management support currency, futures or options trading?

    IB Asset Management supports stock and options trading. We do not currently offer currency or futures trading.

  • I am not a US citizen. Can I manage a portfolio?

    Yes. Non-US citizens can manage portfolios. You must be registered as an investment adviser in the US with either the Securities and Exchange Commission or one or more US state securities regulators and be able to open a US-dollar-denominated brokerage account with Interactive Brokers. You are only able to establish positions in US listed equities (including ADRs), options and ETFs.

  • How do I send in my performance history?

    We are able to display historical performance history for RIAs and Registered Hedge Fund Managers with track records that are GIPS-verified, provided by Interactive Brokers with your permission or, audited by a third-party accountant or auditor. Once you have returned the agreement and portfolio profile form, our Manager Relations team will contact you about this.

  • Can I use my existing brokerage account?

    If you currently have an account with Interactive Brokers, you may be able to use that account and link it to IB Asset Management or open another IB account.

    If you do not have an existing account with Interactive Brokers, you will need to establish one there before being able to offer a portfolio on IB Asset Management.

    With your permission, Interactive Brokers is able to provide us with a real-time view of your trading activity and cash position for purposes of live replication in client accounts investing in your portfolio.

    Once you sign up to manage a portfolio on IB Asset Management, we send you all the information needed to open an Interactive Brokers account linked to IB Asset Management.

Performance drift

Top client account questions

  • What are the fees?

    IB Asset Management only charges fees on investments you make in your account.  There are no entry fees, exit fees, load fees or other hidden charges. The only other fees you will be charged are those levied by the broker. Learn more about IB Asset Management fees.

  • What is the minimum deposit required?

    To open an account you need to fund it with a minimum of $5,000. If you plan to invest in a number of portfolios, or those that trade heavily we recommend that you fund the account with a minimum of $30,000 to prevent your account being locked under SEC pattern day trading rules.

  • Can I invest in more than one portfolio?

    Yes. You can invest in as many portfolios as you want in a single account. When you sign in to IB Asset Management you can see your positions, both in aggregate and broken out by investment.

  • How long does it take to replicate a trade?

    Typically trades are replicated within one minute. Actual times may vary.

  • Why is there a difference between the manager's performance and my own?

    We call this drift. There are a number of causes of drift including replication time, risk score, and stock exclusions. Drift is typically caused by managers trading outside of the trading rules, or in securities that are not replicated for clients. Learn more about performance drift.

  • Will I be able to invest in all portfolios?

    The subset of portfolios you can invest in is determined by your risk score as well as the type of account you have opened with your broker. Some Portfolio Managers have opted for accounts with extended trading capabilities (e.g., immediate settlement of trades, ability to use leverage, etc.). If your account does not possess the same abilities, IB Asset Management would not be able to replicate the Portfolio Manager's trades in your account. This is why some portfolios could be unavailable to you. For further details on account types, please contact us.

Top Smart Beta questions

  • How are IB Asset Management Smart Beta portfolios different from other portfolios on IB Asset Management?

    The IB Asset Management Investment Management team, under the leadership of Chief Investment Officer Sanjoy Ghosh, manages IB Asset Management’s Smart Beta portfolios. The team is responsible for undertaking a systematic process to select stocks, construct the portfolios, continually monitor for any relevant events and periodically (at least quarterly) rebalance the portfolios.

    The other portfolios on the IB Asset Management platform are managed by third-party investment advisers or hedge fund managers. These portfolio managers fund and trade a proprietary manager-owned brokerage account. In contrast, for each IB Asset Management Smart Beta portfolio, IB Asset Management funds and trades a proprietary IB Asset Management-owned brokerage account. In both cases, each trade made by the portfolio manager (or IB Asset Management) is automatically replicated in clients’ brokerage accounts based on which portfolios the clients have selected to invest in.

  • Can fractional shares be traded on public exchanges?

    Stocks cannot be traded in fractions on public exchanges, which means that you need a counterparty willing to transact with you in fractional shares.

  • What is the ‘lockout period’ and how does it apply to my IB Asset Management account?

    A lockout period starts 3 business days before each Smart Beta portfolio rebalance and ends right after each rebalance. During each lockout period, we will not allow clients to make any initial, additional or recurring investments in any Smart Beta portfolios. If you request such a transaction during a lockout period, IB Asset Management will send your transaction request for execution on the first trading day following a rebalance.

  • How will I know whether one of my investment instructions has occurred during a lockout period?

    The confirmation you receive when you submit an investment instruction will indicate that the portfolio is under lockout and will also inform you of the date on which your instruction will be processed.

  • What are the benefits of TAX.IB over a passive ETF?

    Tax loss harvesting is a way to improve your after-tax investment performance over a passive ETF. Owning a basket of individual stocks provides the opportunity to effectively harvest your losses based on price changes in each security position. Every quarter, TAX.IB is rebalanced, and stocks with losses are replaced with stocks that have similar expected risk and return characteristics and those losses are harvested. In an ETF you have to wait for a general market downturn and the total value of the ETF to drop below the cost basis to be able to harvest any losses. Capital gains in your IB Asset Management account and other investments and up to $3,000 of ordinary income annually can be offset with the losses experienced in the TAX.IB portfolio. Any excess losses can generally be carried over indefinitely and applied against future year capital gains and income.

    IB Asset Management does not provide tax advice and does not represent in any manner that investing in this portfolio will result in any particular tax consequences. The tax consequences of investing in this portfolio are complex, uncertain and may be challenged by the IRS. Current and prospective clients should consult their personal tax advisers regarding the tax consequences of investing in this portfolio or any other IB Asset Management portfolio, based on their particular circumstances. IB Asset Management does not assume any responsibility for the tax consequences for any investor or any transaction. Clients and their personal tax advisers are responsible for how the transactions conducted in their accounts are reported to the IRS or any other taxing authority on the Client’s personal tax returns. For additional information on claiming tax losses on your tax filings, review the IRS instructions on Schedule D (Form 1040) Capital Gains and Losses or IRS Publication 550.

  • What is a wash sale?

    A wash sale is a sale of stock or securities at a loss within 30 days before or after you buy or acquire a contract or option to buy, or acquire in your IRA or Roth IRA substantially identical stock or securities. The wash sale period consists of 61 calendar days: 30 days before the sale and 30 days after the sale. Ordinarily, stocks or securities of one corporation are not considered substantially identical to stocks or securities of another corporation, but they may be substantially identical in some cases. For instance, in a reorganization, the stocks and securities of the predecessor and successor corporations may be substantially identical. A wash sale does not completely eliminate benefits of TLH but reduces that benefit by the amount of the wash sale itself. A wash sale defers the recognition of the loss: the amount of the loss is added to the cost basis of shares purchased during the wash sale period, and upon the sale of the newly acquired shares, the disallowed loss is incorporated into the calculations of the gain or loss on those shares and recognized. Additionally, the holding period of the original shares is added to the holding period of the newly acquired shares or securities. The IRS guidelines on wash sales are designed to prevent investors from artificially generating losses where they do not actually intend to reduce their holdings in the assets sold.

    IB Asset Management does not monitor for wash sales in client accounts and will not provide notice of wash sales to clients investing in any of its portfolios. Clients are responsible for monitoring their and their spouse’s accounts, including their IB Asset Management portfolios, Interactive Brokers investments, and other investments, to confirm that transactions do not create wash sales. The wash sale rule applies to all of a client’s accounts, including IRAs, as well as spousal accounts for joint filers. Clients may find information on wash sales in their Interactive Brokers 1099-eligible accounts on their daily, monthly and annual activity statements. Clients may violate the wash sale rule and be unable to harvest certain of their tax losses if they use multiple tax-loss harvesting providers or brokers.

    For more information on the wash sale rule and other tax-loss harvesting-related issues, please review IRS Publication 550 and the Interactive Brokers website.

Top trading options questions

  • How do I become eligible for investing in portfolios that trade options at IB Asset Management?

    To be eligible to invest in portfolios that trade options, you will first need options trading permission at Interactive Brokers. This is an opt-in permission that you must set in your IB account after confirming that you have received and read a document by the Options Clearing Corporation. Additionally, to enable options trading in your IB Asset Management account, you will also need to enable options trading in your IB Asset Management account by reviewing, acknowledging and signing the enable options screen.

  • What are some of the risks of trading options?

    Options trading involves a high degree of risk, is highly speculative, and is not suitable for all investors.

    Trading options may result in the total loss of premiums and transaction costs.

    Options have an inherent leverage because each contract provides derivative exposure to a larger number of the underlying security (usually 100 shares). Each option contract is inexpensive relative to the value of the underlying exposure but a small change in the value of the underlying stock may cause a significantly larger move in the value of the option.

    Options have an ‘asymmetrical payoff’, which means that, as the underlying security price changes, the option may change in price by a different amount. This rate varies depending on whether you are long or short as well as a variety of other factors.

    Options are time-sensitive investments. If you buy an option, you could lose your entire investment even with a correct prediction about the direction and magnitude of a particular price change. For example, the price change does not occur in the relevant time period (i.e. before the option expires).

    Trading halts in the underlying security or other trading conditions (e.g., volatility, system failures) may cause the trading market for one or all options to be unavailable, in which case the holder or writer of an option would not be able to engage in a closing transaction, and would remain obligated until expiration or assignment.

    Options are less tangible than some other investments. Stocks offer certificates, and trade on liquid exchanges, but an option is a book entry-only investment without a paper certificate of ownership. While you are not required to hold an option through expiration, the opportunity to relinquish it may be limited depending on market conditions.

    You should carefully review The Options Clearing Corporation’s ("OCC") disclosure document “Characteristics and Risks of Standardized Options” and Interactive Brokers LLC’s “OCC Risk Disclosure Statement and Acknowledgements.”

    If you are uncomfortable with the level of risk associated with options trading, you should not trade options and should contact IB Asset Management at 1.866.825.3005 to let us know.

  • Can my performance be different from my Portfolio Manager's performance?

    Yes. IB Asset Management will attempt to mirror the options trading in the portfolio a client invests in but may not be able to perfectly replicate the same proportion of options in the client’s account that the Portfolio Manager holds in his account. The performance in the client’s account may be significantly different or worse than that of the Portfolio Manager’s account for several reasons, including but not limited to the following:

    Integer replication:IB Asset Management is unable to transact partial options contracts. This will result in the client’s account holding proportionally less or more options than the Portfolio Manager. As options are leveraged instruments and options positions often have associated stock positions, this position imbalance between the client’s and the Portfolio Manager’s accounts could result in the client account having significantly different performance, leverage, levels of risk and trading costs than the portfolio he invests in.

    Illiquidity:The liquidity of options contracts in a portfolio varies from one day to the next. Depending on when a client chooses to invest in an options portfolio, certain contracts may or may not be easily traded, which may result in the client’s account having different performance, leverage, levels of risk and trading costs than the portfolio he invests in.

    Frequent cash flows:If a client frequently redeems options investments from his account, his account will have proportionally more or less options and associated stock positions than that of the Portfolio Manager, as certain positions are liquidated or additional margin is utilized in order to generate cash for redemptions. Performance drift will also result from frequent cash additions to the options investments in the client’s account.