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Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

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Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#11

Post by dayone1 »

1) are you going to sell your trade flow to Citadel / market makers like Robinhood and your competitors do? That's the dirty secret way of making money that you seem to have completely excluded. The reality is that adds up to substantial "invisible" fees that the investor has no transparency over because you sell your trade flows to them and they make a higher than normal spread. And the whole "doesn't matter if we sell your trade flows, the rules require you to get best execution" is a farce and everyone in the industry knows this - otherwise there is no reason why Citadel or Virtu would bid billions of dollars to just buy the trade flow.

2) Are you going to rebate your borrow fees back to investors? This is the other dirty secret way of making money. Many people don't realize that you can earn lending fees by lending your shares out for people looking to short stocks, and those add up to substantial amounts over time for a scaled asset manager. Do you keep this instead of rebating it fully back to your customers?

3) If the answer is no, you don't sell trade flows and yes, you will rebate your borrow fees, can you make a lifetime commitment that you won't go back on your word? Many people who start in this industry say they won't sell trade flows and then after they reach scale they change the footnotes and agreements and starting selling trade flows.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#12

Post by jjmaxwell4 »

agsqwe wrote: post #3

How are you going to make money?

We charge $1/month.

Longer term, we think there are additional revenue streams we can enable that are similar to existing broker-dealers like Robinhood, Fidelity and Schwab. That means things like cash float, margin lending, stock lending and payment for order flow. Currently we are not a broker-dealer.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#13

Post by jansen »

carbocation wrote: post #6

FZROX gives me 0% fees, can be bought in my retirement accounts, and is attached to a company with something like $1 trillion AUM. The latter gives me faith that it will still be around next year. I appreciate that the 0% fee options are limited, but personally I’d rather deal with 0.03% fees than entrust my money to a small shop. Especially when the reason to do so is not some trading edge, but saving a small amount…

Every shop is a small shop when it starts out. Maybe give these guys a break?

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#14

Post by shred45 »

Do you manage the portfolio of each customer individually? How closely will this match the target portfolio for smaller investment sizes? I see that there are minimum investment sizes. Do I need to buy at least one share of each member of the SP500 for instance?

How do transaction fees compare with expense ratios of, say, Vanguard? I see that you account for them in your backtest, but it would be helpful to represent that in terms of an expense ratio.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#15

Post by ddulaney »

How are you tied back into the financial markets? Are you yourself an exchange member? Or are you going through a traditional brokerage? Or are there other middlemen?

I’m really worried about putting my money into any startup after the Synapse collapse, where a middleman for lots of tech-forward not-a-bank companies collapsed, stranding customer money.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#16

Post by hn_throwaway_99 »

I saw the "Your Money is Secure" section, but after things like the Synapse fiasco, I would like to get confirmation from you.

It says my money would be SIPC insured, which means if anything goes missing (obviously not through loss of equity value, but through missing funds or a ledger bug), I get my money back, up to the SIPC limit, right? I just want to ensure this isn't the same situation with fintechs that say your money is "FDIC insured", but that only protects you if the bank fails, not if the fintech goes bankrupt.

I'm just really, really wary of new fintech products to save like .3% on fees when I hear all these horror stories of people trusting fintech startups with their money any then losing 95% of their deposits like the Yotta customers.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#17

Post by shred45 »

dayone1 wrote: post #11

1) are you going to sell your trade flow to Citadel / market makers like Robinhood and your competitors do? That's the dirty secret way of making money that you seem to have completely excluded. The reality is that adds up to substantial "invisible" fees that the investor has no transparency over because you sell your trade flows to them and they make a higher than normal spread. And the whole "doesn't matter if we s…

> they make a higher than normal spread

Is this known for sure? I thought the value of this order flow to them was the lack of adverse selection.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#18

Post by rs999gti »

dayone1 wrote: post #11

1) are you going to sell your trade flow to Citadel / market makers like Robinhood and your competitors do? That's the dirty secret way of making money that you seem to have completely excluded. The reality is that adds up to substantial "invisible" fees that the investor has no transparency over because you sell your trade flows to them and they make a higher than normal spread. And the whole "doesn't matter if we s…

> sell trade flows

This is the real reason for low/no broker fees. Don't believe any broker that says they will input orders without taking their cut otherwise they (automated or not) would not exist.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#19

Post by jjmaxwell4 »

ddulaney wrote: post #15

How are you tied back into the financial markets? Are you yourself an exchange member? Or are you going through a traditional brokerage? Or are there other middlemen? I’m really worried about putting my money into any startup after the Synapse collapse, where a middleman for lots of tech-forward not-a-bank companies collapsed, stranding customer money.

Your account is in your name at Apex Clearing - they are our Custodian and Broker Dealer. They power a lot of modern brokerage products like WeBull, TastyTrade, Composer, SoFi.

Robinhood and Wealthfront both started their business on Apex as well.

https://apexfintechsolutions.com/

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#20

Post by coldpie »

I'm not super well versed in how investing stuff works, so sorry if I get some words wrong. This isn't a fund I'd be able to purchase from my existing brokerage/retirement accounts, right? I would have to actually give my real money to you (via "Apex Clearing," who I've also never heard of & doesn't even have a Wikipedia page) to hold & manage? Even in the best of times, it'd take quite some convincing for me to give a significant amount of money to a brand new company, and the reputation of recent finance startups is uhhhhhh not fantastic. How are you going to convince me you won't take my money to go buy some property in the Bahamas?
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