CopyFunds is an interesting trading
product developed by eToro. These funds are managed by some fund
managers who decide what trades or assets stay and what leaves the fund.
They also decide the ratio of those assets in the CopyFunds.
Usually, the fund’s manager tries to
balance out the risk score and get it down to a minimum. They do it by
adding low-risk and higher-risk assets to the funds in a way that if one
asset gets down too much, others can pull the overall value of the
CopyFunds into a stable position. But adding these assets in a balanced
way is not easy. So, eToro decided to divide their CopyFunds into three
different categories or types.
- Top Trader CopyFunds
- Market CopyFunds
- Partner CopyFunds
I’ll discuss the three different types briefly here,
Top Trader CopyFunds
By CopyFunds, we usually understand some
assets are stacked in a fund, managed by a manager. But the Top Trader
CopyFunds is not like that. However, the basic idea is same. But instead
of stacking different assets, managers of a Top Trader CopyFund stack
the most successful and top-rated traders.
This CopyFund type is not that popular
but if invested correctly, investors can get a huge return from it. But
before you invest, make sure you do your homework on the top traders you
are investing in.
Market CopyFunds
When you hear CopyFunds, you most probably think about these CopyFunds.
This type of CopyFunds are the most usual ones. For example a Food and Drinks CopyFund or Even a Gaming CopyFund.
When you see a Market CopyFund, you
understand instantly what it is about. The Food and Drink CopyFund will
have everything related to Foods and Drinks and a Gaming CopyFund will
have anything related to the gaming industry.
But sometimes the boundaries are vague.
For example, we might think of EA and Nvidia stocks when we are talking
about Gaming related CopyFund. The reason is very obvious. EA produces
games and Nvidia graphics cards are a must for a gaming setup.
But there are more to it. A Market
CopyFund may also have the raw materials of that industry besides the
stocks of companies operating in the same industry. So if you see any
raw material used in making chips or motherboards ending up on the
Gaming CopyFunds like In The Game, don’t wonder why.
So, to conclude, Market CopyFunds is simply the aggregation of different assets following the same specific market strategy.
Partner CopyFunds
Last but not the least, there are Partner
CopyFunds. Unlike Market CopyFunds, these are somewhat more specific.
If I want to explain it in a subtle language, Partner CopyFunds are
simply a group of the world’s most innovative and creative financial
service companies.
Basically, if you are an investment
manager, you can grow your business by creating a CopyFunds and then
distribute and promote so that people are interested in investing in
your CopyFund.
Alpha Core, Warren Buffet-C.F, World Equity Plus, etc., are some good examples of Partner CopyFunds.
Conclusion: Now that you
know about all three different types of CopyFunds, you can choose your
desired category of CopyFunds and get into the trading world. But make
sure that you did your homework before investing in any of them.
