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Show HN: Double – Design and invest in your own stock index

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Re: Show HN: Double – Design and invest in your own stock index

#51

Post by jjmaxwell4 »

NathanaelRea wrote: post #42

In regards to making a "S&P - company/sector" portfolio, how can you compete with other ETF issuers? I feel like you wouldn't be able to get an expense ratio close enough to other large ETFs for the risk weighted return to overcome it. You can maintain a low expense ratio that down weights a sector by combining ETFs. But instead of having a high AUM to reduce churn, that expense is on me.

I'm a bit confused by your question, but we do not plan to charge any AUM fees.

By direct indexing you get a lot more flexibility to customize the index on a stock/sector/factor level.

Thanks for checking us out.

Re: Show HN: Double – Design and invest in your own stock index

#53

Post by jjmaxwell4 »

treeform wrote: post #43

If I were to set up a customized S&P500 (with some tweaks) and over time companies leave and/or are added to the index. Will those changes be reflected in my custom S&P500? In the months or years in the future will it buy or sell these new currently unknown companies?

Yes we handle corporate actions and index additions or deletions and weight changes over time for you.

The guts of this get a bit complicated and I want to make a blog post about how we achieve this for adjustments.

Re: Show HN: Double – Design and invest in your own stock index

#54

Post by ahtihn »

dzink wrote: post #45
jjmaxwell4 wrote: post #16

Earlier quoted context omitted.

Why trust us? 1. We're working with Apex Clearing, a large US Custodian with more than $100B of assets. Your account is in your name there. 2. We're well funded and backed by reputable investors (YC, Matrix, Youtube Cofounder, and many others). 3. We are registered with the SEC as an registered investment advisor. 4. I personally am in the process of transferring nearly my entire net worth onto the platform. We event…

PFOF is a deal breaker. If everyone but Fidelity is doing it thats a huge selling point for Fidelity. Go against the grain and do what is right for your customer if you want to have the net worth of people who care about their money and thus more trust than Robinhood.

Why would you care about PFOF as a retail investor? You're benefiting from it.

Re: Show HN: Double – Design and invest in your own stock index

#56

Post by dmoy »

dzink wrote: post #45
jjmaxwell4 wrote: post #16

Earlier quoted context omitted.

Why trust us? 1. We're working with Apex Clearing, a large US Custodian with more than $100B of assets. Your account is in your name there. 2. We're well funded and backed by reputable investors (YC, Matrix, Youtube Cofounder, and many others). 3. We are registered with the SEC as an registered investment advisor. 4. I personally am in the process of transferring nearly my entire net worth onto the platform. We event…

PFOF is a deal breaker. If everyone but Fidelity is doing it thats a huge selling point for Fidelity. Go against the grain and do what is right for your customer if you want to have the net worth of people who care about their money and thus more trust than Robinhood.

IBKR, vanguard, and I think even Bank of America also don't do PFOF.

Re: Show HN: Double – Design and invest in your own stock index

#58

Post by noduerme »

Very basic, maybe stupid question: If you're not changing your portfolio strategy or altering your weights, does this work by rebalancing your investment every so often, so that the % of total dollars you hold in an index continues to match the weights you set?

Like if a customer creates an index that's 50% AMD and 50% NVDA, and you put $100 in that index, does the customer have some underlying account that initially apportions $50 to each, and then if the next day their NVDA is worth $52 and their AMD is worth $48, the system will sell $2 worth of NVDA and buy $2 worth of AMD?

And if that's so, can you set target thresholds for when you want it to rebalance? Like, not until one stock deviates more than 10% from its ideal weight?

Re: Show HN: Double – Design and invest in your own stock index

#59

Post by jjmaxwell4 »

noduerme wrote: post #58

Very basic, maybe stupid question: If you're not changing your portfolio strategy or altering your weights, does this work by rebalancing your investment every so often, so that the % of total dollars you hold in an index continues to match the weights you set? Like if a customer creates an index that's 50% AMD and 50% NVDA, and you put $100 in that index, does the customer have some underlying account that initially…

Not a stupid question at all.

Short answer for your simple scenario is yes it would rebalance. The longer answer is it depends on the output of our optimization engine.

Our optimizer tries it's best to make the portfolio better, taking into account drift, trading costs and taxes and potentially holding costs for etfs and a factor model for broad diverse portfolios. Wash sales also play a large part because by default we prevent any wash sales from taking place.

These objectives can compete against each other (tax harvesting is generally good but in your example requires selling AMD not buying it). We run an optimization to try and balance these and come up with trades that make the portfolio better. By default we rebalance if the optimizer thinks the portfolio will get better above a threshold we set.

We have the ability to rebalance based on naive weight drift as you discussed at the end of your comment - right now it's not enabled by default. We are hoping to add a setting so users can enabled the optimizer to only trade if x number of stocks have drifted more than y%.

Please check out this article to learn a bit more: https://help.double.finance/en/articles/9718142-portfolio-op...

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