This is an in-depth review of the Titan Invest app.
In this Titan Invest review, we’ll cover:
- What Titan offers and why it’s different from most actively managed funds.
- Titan Invest pros and cons.
- Titan Invest alternatives.
After reviewing the app’s basics, I’ll share my views regarding who should consider opening a Titan Invest account, and when that makes the most sense.
Titan Invest aims to provide access to the strategies used by hedge funds to serve high-net-worth investors. The company offers three different actively managed equity portfolios as well as a crypto-only fund. Their flagship stock market fund, launched in February 2018, has seen annualized returns of 20.4% at the time of publication, while the S&P 500 has returned 15.8% over this same period. Overall, Titan’s investment strategy, while sound, does come with relatively high risk and shouldn't 100% replace a balanced portfolio.
- Low minimum investment of $100.
- SIPC Insured up to $500,000.
- A crypto assets fund is available.
- Zero performance fees.
- Utilizes a high-risk strategy.
- 1% management fee for accounts over $10,000.
- $5 per month fee for accounts under $10,000.
- Has a very limited track record.
- Only offers equities and crypto.
- No value-added services, such as access to a financial advisor or tax-efficient investing.
- Is tax-inefficient.
Titan Invest at a Glance
Launched in 2018, Titan Invest offers investors access to four actively managed portfolios.
Their four portfolios offers are:
- Titan Flagship: A large-cap, U.S.-focused growth fund.
- Titan Opportunities. A small-cap, U.S.-focused growth fund.
- Titan Offshore. An international growth fund focused on medium to large companies outside of the U.S.
- Titan Crypto. An actively managed crypto-only fund.
Titan’s stock portfolios are similar to actively managed mutual funds. However, there are a few key differences to be aware of.
First, Titan doesn’t pool your funds together with other investors, as is the case with both a mutual fund and a traditional hedge fund. Instead, your money is kept in an individual account and invested according to Titan’s strategies.
Second, Titan’s portfolios are much more concentrated than what you’d find from other growth funds. For example, below you can see the number of stocks held by two of the largest U.S. growth funds, compared to Titan.
|Comparison to U.S. Growth Funds|
|Fund Name||Numbers of Stocks Held|
|Titan U.S. Flagship||15-25|
|Vanguard U.S. Growth Fund||275+|
|Fidelity® Growth Company Fund||650+|
Having a more concentrated portfolio means you’re subject to more risk. Of course, there’s also a chance for greater reward.
The key takeaway is that Titan isn’t looking to simply track benchmarks like the S&P 500. Instead, its goal is to provide superior returns with an aggressive strategy.
Titan Key Facts
|Account types:||Individual taxable accounts, Traditional, Roth, SEP and Simple IRAs.|
|Socially responsible options:||None.|
Titan Flagship Fund Holdings
To get a sense of what stocks and cryptocurrencies Titan holds, I signed up for an account and made a deposit. (You can’t view their holdings without making a deposit.)
Keep in mind, Titan typically updates its portfolios quarterly, both changing their holdings and adjusting the size of those holdings.
As of November 19th, 2021, their Flagship Fund held the following securities:
- Alphabet (Google)
- Booking Holdings
- Charles Schwab
- Meta (Facebook)
- Thermo Fisher
- Transdigm Group
They also use the ProShares Short S&P 500 ETF as a hedge against the S&P 500. This fund rises when the S&P 500 falls. The ETF has a .9%. expense ratio.
Your level of hedge is determined by your risk tolerance. Titan has three risk tolerance classifications: conservative, moderate and aggressive. As this ETF has an expense ratio of its own — which is in addition to Titan’s management fee — it slightly increases your overall costs.
|Risk Tolerance||Level of Hedge||Total Fee|
During downturns in the market, Titan increases the amount of hedge to 20%/10%/5%. However, the company doesn’t specify the exact criteria they use to determine a downturn and trigger this change in ratio.
Titan Crypto Fund Holdings
Titan’s Crypto Fund invests in the following assets:
Titan Invest Pros & Cons Explained
Titan Invest Pros:
- $100 account minimum. While a $100 minimum isn’t particularly noteworthy in the actively managed portfolio space, it does stand out in the crypto fund space. Most crypto funds are only available if you’re an accredited investor and have minimums in the tens of thousands. (Note that there is a $10,000 minimum for the Titan Opportunities and Titan Offshore funds.)
- Zero performance fees. A popular fee structure in the hedge fund space is a “2 and 20” model, where the fund charges a 2% management fee and a 20% performance fee. Titan charges no performance fee.
- Offers IRA accounts. This is true for even their crypto fund, which provides investors a simple way to get broad crypto exposure without having to open a self-directed IRA and manage a portfolio themselves (and without having to become an accredited investor).
- SIPC Insured up to $500,000. Many hedge funds do not offer any type of SPIC insurance.
Titan Invest Cons:
- High degree of risk. Titan’s investing strategy is very different from what you’ll find with a traditional robo advisor, which typically aims to create a portfolio that offers more upside with less risk than a standard balanced index fund approach. Titan is different in that they’re trying to offer the best returns of any potential strategy. That means it’s best suited for an investor with high risk tolerance.
- 1% management fee for accounts over $10,000. The average expense ratio of similar funds is 1.22%, so Titan’s 1% fee is on the low side. However, the fee also increases based on the level of hedge you’re assigned. Keep in mind that this fee is charged whether or not Titan outperforms the market.
- $5 per month fee for accounts under $10,000. While you can start investing with $100, this fee means you’re essentially paying 5% per month to do so (which is exorbitant). If you do the math, a $1,000 balance would have a 6% annual fee. In other words, investors with a low balance will pay a high fee. And, remember, there’s no guarantee your investment will outperform a zero-fee ETF.
- Their track record is very limited. Titan’s Flagship fund was launched in 2018, and all of their other funds were launched in 2021. While the Flagship Fund has outperformed its benchmark (the S&P 500) since its inception, it’s still a very limited time frame.
- Limited to equities and crypto. While Titan aims to offer hedge-fund-like strategies to everyday investors, the only asset classes they invest in are individual stocks and crypto. A Morgan Stanley report from 2020 on investing strategies within the private space notes that “many […] endowments and pension funds have sought to follow suit, shifting their asset allocations away from a traditional mix of stocks and bonds toward a greater weighting of alternative investments, including buyout and venture capital funds. As we will see, there was a substantial benefit to being early and having the ability to find skilled managers” (source). While Titan often refers to itself as being similar to a hedge fund, it misses out on many key asset classes leveraged by the hedge fund. And it’s in those alternative asset classes where hedge funds often have the biggest advantage.
- It’s tax-inefficient. There’s a lot more turnover within one’s portfolio with the way Titan invests, compared to alternatives like index funds. High turnover can lead to paying more taxes when you’re investing via a taxable account.
Titan Invest Alternatives
Some of the most prominent Titan Invest alternatives include M1 Finance, traditional robo-advisors like Betterment and Wealthfront, and actively managed mutual funds. Here’s a look at each.
Titan Invest vs. M1 Finance
While M1 Finance doesn’t aim to mimic a hedge fund, it does offer a limited number of aggressive portfolios. These portfolios, named “Hedge Fund Followers,” replicate the trades of some of the largest hedge funds in the world.
How they replicate the trades is that hedge funds file a document called a 13F each quarter. This publicly available document lists their most recent holdings, as well as their allocations.
Once a 13F is filed, M1 updates its portfolios to reflect changes made over the last quarter. This means trades can be up to 90 days behind the hedge funds they track.
Titan does not offer this strategy. They design their own portfolios from scratch, using their own strategy to try and beat the market.
Titan Invest vs. Wealthfront and Betterment
A robo advisor’s goal is to take a balanced, optimized portfolio of primarily low-cost index-based ETFs and maintain it by making small adjustments over time. Titan, on the other hand, attempts to offer the best returns available through a condensed portfolio of individual stocks.
Titan’s goal is to create an investment portfolio that is fundamentally different than what you’ll find with typical robo advisors.
Titan Invest vs. Actively Managed Mutual Funds
What Titan offers on the equity side is very similar to what you’d get with an actively managed mutual fund.
There are thousands of different actively managed funds. Similar to Titan, most actively managed funds have a benchmark they’re trying to beat, such as the S&P 500.
As noted earlier in this review, one thing Titan does differently than many actively managed funds is hold a more concentrated selection of stocks. They hold only 15-25 different equities at a time, while many of the world’s largest actively managed funds hold hundreds of stocks at a time.
Titan’s all-in 1% fee for a portfolio over $10,000 comes in slightly below average in the actively managed space. By comparison, Vanguard, known for its low fee structures, has an actively managed Emerging Markets Select Stock Fund with a .85% fee. According to Vanguard, the average expense of similar funds is 1.22%.
Many actively managed funds have higher minimum investments, and often, restrictions on withdrawals. Titan has neither.
Is Titan Invest Right For You?
The question I come back to with Titan is where it fits in one’s overall investment strategy. Specifically, out of the amount you have allocated to equities, would it be wise to allocate a portion of that to a more aggressive strategy like the ones Titan leverages?
The short answer is that you should treat an investment in Titan’s equity portfolio similar to investing in individual stocks. A small allocation — say 5% to 10% of your total investment — is reasonable. Anything beyond that carries significant downside risk and is not appropriate for the average investor.
My main issue here is that good equity managers have historically been very hard to select. The left side of the chart below shows the difference between the managers in the 25th percentile of returns vs. those in the 75h percentile for traditional equities (e.g., stocks and bonds). As you can see, the difference is small.
With only a small performance spread separating managers, one can conclude that it’s difficult picking an equity fund manager who will consistently outperform.
On the right of the chart you’ll see the spread between managers of more alternative asset classes. It’s here where the spreads become wide, and therefore, where it becomes easier to identify the best manager.
Titan, however, doesn’t invest in alternatives — with the exception of crypto. And it’s the alternatives where hedge funds are investing more and more.
As noted in the Morgan Stanley report I mentioned earlier, “…a large sample of state and local government pension funds in the U.S., with total assets estimated to be $4.5 trillion, have increased their allocation to alternative assets from 7 percent in 1990 to 29 percent in 2019. Close to 40 percent of surveyed institutional investors plan to increase their exposure to alternative assets.”
It’s for this reason that I was excited to see Titan release their new crypto fund. Just as institutions are shifting towards alternatives, so are individual investors. Yet individual investors are limited in options within the alternative space.
My hope for Titan is that we see more alternative-based, professionally managed funds like their newly-launched crypto fund.
Worth mentioning about their crypto-only fund is that it also provides the option to invest in an IRA. There’s been research from Yale that says one should hold up to 6% Bitcoin in their retirement account for optimal construction.
Right now, options are limited for those investors looking to hold cryptocurrencies like Bitcoin. While self-directed IRAs such as Alto IRA and Choice are available, they’re more for experienced crypto investors.
Titan, on the other hand, offers a professionally managed crypto portfolio that could make sense for those interested in a small allocation of crypto, including their retirement account. This is where I feel Titan provides a unique offering today in the marketplace.