Author Topic: Titan investment manager  (Read 442 times)

bonesmtb2

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Titan investment manager
« on: July 07, 2020, 09:24:36 AM »
This came up in my Instagram, and seems pretty intriguing.
https://www.titanvest.com/

I have been a long time Betterment customer, but am very tempted to put a few thousand with this company to see if their promised returns hold true.

Anyone have any experience with them?

caffeine

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Re: Titan investment manager
« Reply #1 on: July 07, 2020, 11:32:20 AM »
https://cdn.titanvest.com/library/Flagship_Tearsheet_053120.pdf

20 stocks /w short protection & 1% fee. I don't know :\

It only has $100 minimum fee so it enticing, but I prefer boring investment strategies.

Quote
Across all of our strategies, we offer downside protection that's tailored to individual risk tolerances. This allows our clients to potentially earn profits when the market declines. It's the reason we were ranked the #1 investment advisor out of 60+ others for equity returns during the COVID-19 crisis.

bacchi

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Re: Titan investment manager
« Reply #2 on: July 07, 2020, 02:32:33 PM »
Isn't downside protection just a long OTM put? Why pay 1% when it's simple to do so yourself?


MustacheAndaHalf

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Re: Titan investment manager
« Reply #3 on: July 07, 2020, 03:05:04 PM »
https://cdn.titanvest.com/library/Flagship_Tearsheet_053120.pdf
20 stocks /w short protection & 1% fee.

I see several things I don't like:

(1) they show performance for 2018-2020.  Even if they only existed for 2.5 years, it's biased information: 2 of the 3 years were "down" years, making their downside protection look good.  It's atypical performance, which gives a biased perspective of them providing more value than they do.

(2) "YTD" does not mean "year", it means "year to date".  They can't use "YTD" for 2018, 2019 and 2020.  A basic term misused in the most important part of their offering is a red flag to me, like they don't know what they're doing.

(3) Their downside protection still allows for losses.  Their biggest losing months in the past 2.5 years were: -14% (Mar 2020), -9.2% (Oct 2018), -7.7% (Dec 2018) -7.6% (May 2019), -7.3% (Feb 2020).  In 2018, they lost against the S&P 500 (-7.0% vs -6.1%).

All that said, sure it's nice they have much better performance from Jan to May 2020.  Notice in the other full year performance, they are within 1% to 2% of the S&P 500.  Suddenly when their approach is ahead, they publish Jan to May data.  Those are points I'd suggest being aware of if you want to invest with them.

MustacheAndaHalf

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Re: Titan investment manager
« Reply #4 on: July 07, 2020, 03:15:41 PM »
Isn't downside protection just a long OTM put? Why pay 1% when it's simple to do so yourself?
They don't really offer downside protection, which is why they lost money so many times in the past 2.5 years.  They claim to offer "a personalized momentum hedge" ... "to reduce market exposure during downturns."

Right now a 1 year at the money put on SPY costs 10% of the it's price.  The cheapest June 2021 option costs 2.3% of SPY's price, and only offers protection after a -30% drop.  Having a put option isn't even a guarantee: do you exercise it after a -5% drop or a -10% drop?  When markets are volatile and dropping, put options cost more.  After exercising the put, buying a new one would cost even more.

bacchi

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Re: Titan investment manager
« Reply #5 on: July 07, 2020, 03:56:19 PM »
Isn't downside protection just a long OTM put? Why pay 1% when it's simple to do so yourself?
They don't really offer downside protection, which is why they lost money so many times in the past 2.5 years.  They claim to offer "a personalized momentum hedge" ... "to reduce market exposure during downturns."

Right now a 1 year at the money put on SPY costs 10% of the it's price.  The cheapest June 2021 option costs 2.3% of SPY's price, and only offers protection after a -30% drop.  Having a put option isn't even a guarantee: do you exercise it after a -5% drop or a -10% drop?  When markets are volatile and dropping, put options cost more.  After exercising the put, buying a new one would cost even more.

The high VIX is possibly why their protection didn't work as well as advertised. Given the 1% fee, reloading only works if VIX drops to the teens again.

I see a June 21 100 SPY option, btw, at $0.58 close. With a 1% fee on a $31k account, they can afford a 175 SPY put. Even if SPY  never drops -44%, the option would still increase in value on a ~34% index/equity decline.

NorCal

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Re: Titan investment manager
« Reply #6 on: July 07, 2020, 05:56:10 PM »
From a risk/reward standpoint, this is no different than any other actively managed fund.  Some years it will do better than an index, some years it will do worse.  Over the long term, and on a risk-adjusted basis, I would expect it to underperform by roughly the amount of their fees.

Adding short positions is one of those things that is a seductive idea, but doesn't add much value in practice.  During my MBA (many years ago), I remember reading a lot of literature about how the 130/30 long/short hedge funds didn't demonstrate any alpha.

bonesmtb2

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Re: Titan investment manager
« Reply #7 on: July 08, 2020, 08:56:23 AM »
Thanks for the analysis everyone!
I am certainly going to stick with Betterment and my company 401k for the majority of my investments.
I have a few thousand in Robinhood that I play with.  The more I have been thinking about it recently, I think I am just going to do my own thematic investing using this.  This way I can invest in technologies that I see as long term very successful/the world needs (e.g. electric cars, plant based meets, genomics).  Hopefully this will give me some higher returns, but not banking on it.

Don't think I will waste my time, and create a new account with Titan, based on the feedback here.  Thanks again for the input!

MustacheAndaHalf

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Re: Titan investment manager
« Reply #8 on: July 08, 2020, 10:38:58 AM »
Isn't downside protection just a long OTM put? Why pay 1% when it's simple to do so yourself?
They don't really offer downside protection, which is why they lost money so many times in the past 2.5 years.  They claim to offer "a personalized momentum hedge" ... "to reduce market exposure during downturns."

Right now a 1 year at the money put on SPY costs 10% of the it's price.  The cheapest June 2021 option costs 2.3% of SPY's price, and only offers protection after a -30% drop.  Having a put option isn't even a guarantee: do you exercise it after a -5% drop or a -10% drop?  When markets are volatile and dropping, put options cost more.  After exercising the put, buying a new one would cost even more.
The high VIX is possibly why their protection didn't work as well as advertised. Given the 1% fee, reloading only works if VIX drops to the teens again.

I see a June 21 100 SPY option, btw, at $0.58 close. With a 1% fee on a $31k account, they can afford a 175 SPY put. Even if SPY  never drops -44%, the option would still increase in value on a ~34% index/equity decline.
It's not the VIX: every year, they've failed to protect against losses, from 2018 to 2020.

If you pay 1% for a one year PUT option, you don't get anything of value - that's not downside protection.  In 2008, SPY dropped -37% for the year.  And this year, it also didn't drop -44%.  So both of the PUT options you're discussing would not have protected clients in either 2008 or 2020 - let alone any year in between.  If I client wants to be protected against losses, letting them lose -44% every time doesn't strike me as meeting their needs.

NorCal

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Re: Titan investment manager
« Reply #9 on: July 08, 2020, 06:05:51 PM »
Thanks for the analysis everyone!
I am certainly going to stick with Betterment and my company 401k for the majority of my investments.
I have a few thousand in Robinhood that I play with.  The more I have been thinking about it recently, I think I am just going to do my own thematic investing using this.  This way I can invest in technologies that I see as long term very successful/the world needs (e.g. electric cars, plant based meets, genomics).  Hopefully this will give me some higher returns, but not banking on it.

Don't think I will waste my time, and create a new account with Titan, based on the feedback here.  Thanks again for the input!

Just an FYI, this thematic investing also has a mixed track record. I’m not saying it won’t work, but read up on the history of Softbank’s vision fund before committing too much. This is a good cautionary tale on investing in the big long term changes.