Titan Review: A hedge fund in your pocket!

Alan Angeloni
Co-Founder & CEO

Over the past 20-30 years, there has been an incredible surge in the number of personal finance tools that are available to the consumer. Overall, this has been very good since it has made finance much easier. However, because there are so many uses for these tools (budgeting, saving, spending, investing, retirement planning, etc.) it can be very difficult to know which tool(s) are right for you.

To help give you some quick answers, we have broken down a few of the most popular tools and highlighted the basics for you.

Please enjoy this very thorough review of the popular app, Titan.

What is Titan?

****Titan is the first actively managed hedge fund that is available to the general public. Their belief is that ultra-wealthy investors with millions of dollars get individualized attention for their portfolios while the rest of the public is encouraged to invest in ETFs and index funds that track the overall return of the market.

Titan wants to take a service that is normally reserved for the wealthy and bring it to the average investor.

To clarify this, we first want to identify the difference between actively and passively managed money:

  • Actively managed funds – This involves a fund manager or team of people who are actively buying/selling stocks routinely in an attempt to outperform the average return of the stock market (the average historical return of the stock market is approx 10%).
  • Passively managed funds – This involves simply buying an indexed fund and letting your portfolio match the return of the market.

There is nothing wrong with investing in a passively managed fund and many people (Warren Buffet included) believe that it is one of the easiest and most consistent ways to make money in the stock market. This is because many actively managed funds will spend lots of time and money trying to outsmart the market by strategically buying/selling stocks. Due to all of this buying and selling, they miss out on long-term growth opportunities and actually end up underperforming the market over the long run.

Additionally, actively managed funds are known to charge much higher management fees.

Let’s take a look at how Titan plans to follow through on its promise to “give the best of Wall Street to everyone”.

Titan Features

****There are two main funds that Titan offers for their clients. When you give them money, they will be investing it in one of these two places:

Titan Flagship – This is their U.S. large-cap growth strategy. They have selected 20 companies that they believe have a lot of potential as a long-term investments. Essentially, instead of tracking the entire stock market (like an index fund or ETF fund does) they have selected their favorite stocks in the market and invested only in those.

These are high-quality businesses vetted through deep fundamental research by our Portfolio Manager and Research team. They do not day trade stocks in this fund but are open to updating it if they find an opportunity with a better risk/reward than something that is currently in the portfolio. In general, they only buy/sell a few stocks throughout the quarter.

Titan Opportunity – This is their U.S. small/mid-cap growth strategy fund. It takes the same mentality but applies it to slightly smaller companies that have more opportunities for growth.

Additionally, a small percentage of each portfolio goes into shorting the overall stock market so that clients have downside protection.

Titan’s offerings are through a website and a mobile app, very similar to most other companies.

Titan Fees and Pricing

****In order to invest in either of Titan’s funds, you will need to make a minimum investment of $100. You can also roll over an existing retirement account such as an IRA or 401(k) to fund your account when you are getting started.

This Fund charges a 1% management fee which is considerably higher than if you were to passively invest in an ETF (where the fees are usually closer to .2%). However, the tradeoff for the higher management fee is that you expect to receive a higher return. We will examine this a little bit closer in a later section.

Titan Review: Pros and Cons

When it comes to personal finance, every tool is going to have pros and cons. Depending on your financial goals, a feature that is considered a pro for one investor could also be considered a con for another. That being said, let’s take a look at some of the pros and cons of using Titan’s platform.

Titan Pros

  • Insider knowledge ****– One of the best parts of investing with Titan is that they give you insider knowledge into their investing rationale (this is something that most investors are very closeted about). For example, they send out memos like this in light of economic updates and how their investing mentality is adjusting.
  • Higher than average returns – Since their inception, they have successfully outperformed the S&P 500 by a pretty wide margin. (It’s worth noting that previous performance isn’t an indicator that the fund will continue to perform well but this is still impressive).
  • Ongoing education – A big part of Titan’s sell is that they want to turn their users into better investors. Even though they handle your money they make a point to explain everything that they are doing so that you can learn from watching them.
  • Investing flexibility – Titan’s leadership picks their stocks and sticks with them for the most part. However, they change their aggressiveness depending on what is going on in the economy. For example, they timed the pandemic slump in early March almost perfectly and jumped back into the market as it was hitting its bottom. If you passively invest in an ETF then this isn’t an option.

Titan Cons

  • 1% management fee – For actively managed hedge funds, a 1% fee is not too bad. However, there are definitely places where you could get similar returns at a lower fee if minimizing fees is something that is important to you.
  • Young company – As a company, Titan is only a few years old. This could mean that they have a lack of experience in the industry compared to more established investment houses. That being said, their leadership did a successful job of navigating their fund during the pandemic, which was one of the most uncertain periods in recent memory.
  • Lack of control – If you want control over your investments, then Titan is the wrong app for you. With Titan, you are essentially buying a Rolls Royce and hiring a driver to get you places. It’s a very comfortable ride but if you like to be the one behind the wheel then we’d recommend finding another app.

Titan: Potential Returns

On their homepage, Titan boasts a return of 22.8% to S&Ps other 14.2% (this is an annualized return over the past three years). Titan’s investment ideology, in a nutshell, is to identify potentially high-performing stocks known as “compounders” and hold them for the long term. In doing this, they aim to beat the market for a 3-5 year span and have so far been quite successful.

It is worth noting that any company that promises to beat the average return of the stock market should be looked at with raised eyebrows. This is not to say that people can not do it, just that it is incredibly difficult to do it consistently. Additionally, some companies have been known to promise incredible returns to lure unsuspecting investors and take their cash.

That being said, Titan seems to be a very reputable company with all of the best intentions, a good strategy, and lots of investing know-how in their leadership team. They are a product of the famous Y Combinator, have been mentioned in Tech Crunch and Business Insider, and there is nothing about their company that is an immediate red flag.

So far they have been successful in outperforming the overall return of the stock market and if you have faith that they can continue to do so then it will be more than worth paying the 1% management fee.

Titan: Investment Risks

Since Titan is an actively managed fund that tries to outperform the average return of the stock market, we would have to say that they are slightly riskier than using other platforms. This is because a wrong decision, bad stock choice, or miscalculation on their part could end up hurting their portfolio’s return (as well as your own).

Conventional wisdom says that tracking the average return of the stock market in a low-cost ETF is one of the best ways to build wealth. However, tracking the average return of the stock market also guarantees that you will never beat the average return of the market. It all depends on what you are looking for as an investor.

If you review their website and management team and have faith in what they are offering then you should definitely feel confident letting Titan invest your money.

Diversifiable risk – Titan limits this by investing in a portfolio of 20 stocks.

A Final Word on Titan

Titan seems to have the best intentions for its fund and wants to do its best to provide a superior service to the average retail investor. Since they are a little more aggressive with their investments, there is going to be a slightly higher risk involved but also a chance for a slightly higher return.

We would recommend Titan for investors who are open to taking on a little more risk than normal in search of getting a better return. These investors are also people who are not interested in investing their own money but are looking for a talented team to do it for them. If you’re interested in opening an account with Titan you can here!

We hope that you have found this article on Titan valuable when it comes to getting an in-depth look at the service that they offer. If you are interested in reading more, please subscribe below to get alerted of new articles as we write them!

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Alan Angeloni
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