- Asset Allocation
- Ease of Use
If you’re in the trading world, then you may know how helpful a solid robo-advisor can be. Titan Invest is a newer automated investment platform that has the trade world buzzing. Titan has a unique set of features and tools, including offering consensus stocks. Does Titan sound like the right automated investment platform for you? Read our in-depth review to learn more.
Titan is a relatively new automated investment platform founded in 2018 by Clayton Gardner, Joe Percoco, and Max Bernardy. The platform went through Y Combinator’s startup school and now manages more than $25 million in user assets. While the platform is still small, it has outperformed the S&P 500 in 2019 – so it may quickly gain traction among long-term investors.
How Titan Works
Titan operates much like other robo-advisor services such as Betterment and Wealthfront, but it takes a fundamentally different approach to how your money is allocated. Rather than offering a diversified portfolio, Titan studies the holdings of about 200 different hedge funds with histories of performance and then picks a set of 20 consensus stocks that these funds are investing in to invest your money in. This means that you won’t have a diversified portfolio with multiple asset classes and protection against market downturns, but you can potentially see higher returns compared to the overall market.
That said, Titan also “hedges” your portfolio by betting against the stock market. Essentially, Titan invests between 0-20% of your total assets in stocks that short the S&P 500 in order to offset losses during periods of market downturn. However, Titan doesn’t always keep your money in short assets – it only does this once the market starts to sour or after the Titan team predicts a downturn. In addition, Titan doesn’t specific what stocks the team thinks are shorting the S&P 500. So, there is a lot of risk involved in this hedging if the Titan team doesn’t adequately predict a pullback or recession (which most funds are unable to predict).
It’s worth noting that Titan only offers personal investing accounts at this time and not IRA accounts. That means that most long-term investors saving for retirement will not want to use Titan for tax reasons. Furthermore, Titan does not offer tax-loss harvesting, which is standard for most other robo-investing platforms.
Titan accounts are only available to US citizens and residents at this time. Opening an account requires a $500 minimum investment.
Titan Pricing and Fees
Pricing at Titan is straightforward – you pay a 1% fee on your total investment, and that’s it. Since your money is invested in stocks rather than ETFs, there are no exchange fees and commissions on stock trades are not passed onto investors.
Keep in mind, however, that an annual 1% fee is extraordinary compared to what most other automated investing platforms charge. Betterment and Wealthfront each charge 0.25% annually (plus ETF exchange fees under 0.2%). In addition, there is no tax-loss harvesting to make up for changing over stock holdings at the end of each quarter.
Platform and Tools
Titan’s mobile app-based platform is reminiscent of Robinhood’s app. The homepage shows a sketch chart of your assets, but without the detailed information you need to dig into returns.
Titan does use the app to provide some transparency, as you can see what stocks your money is invested in during any given quarter. Furthermore, the Titan team puts out short research reports and notifications about stocks that your money is invested in, many in the form of video explainers. Since your money is fully controlled by the Titan team, though, this information is largely provided for investor-retention purposes.
You can use the app to connect to your bank account to transfer money in and out of Titan. Unlike retirement-focused robo-investing platforms, there is no option to put money into a “goal” category. While there are no holds on your money with Titan, issues with withdrawing funds have been reported by some investors.
The promise that Titan makes in exchange for its high 1% annual fee is that it will outperform the market. However, this claim is dubious based on the nascent companies performance so far. In 2018, Titan barely outperformed the market over the first three quarters and then underperformed when the market pulled back in Q4 – so much so that Titan had a -7.5% overall return in 2018 compared to the S&P 500’s -6.1% return.
In 2019, when the market has been growing strongly, Titan has a 23.1% return compared to the S&P 500’s 18.5%. However, Titan’s relatively risky strategy means that this performance is highly susceptible to another pullback. It remains to be seen whether Titan can consistently outperform the S&P 500 by significantly more than the 1% cost of the platform.
Comparison to Alternative Investments
Compared to other automated investing platforms, it’s hard to justify the cost of Titan until the platform can prove its performance over the long-term. Titan costs four times as much as mainstream robo-advisors, and the high-risk stock-only investment strategy failed miserably in 2018 when the stock market experienced a significant pullback.
That said, Titan could be used as a high-risk supplement to a more conservative diversified portfolio established through another automated investing platform. This would allow investors to benefit when the market is going up, but offer some protection when the market drops. However, a simple index ETF would likely still be a better long-term investment than investing with Titan.
Titan’s Key Differentiators
Titan is fundamentally different than most other automated investing platforms in that it invests directly in a set of 20 stocks, rather than in ETFs or a diversified mix of asset classes. This stock-only investment strategy is highly risky, and Titan’s ability to predict market pullbacks and to move your money into short positions is largely untested. That said, the high-risk, high-reward strategy of Titan can be a supplement to a broader, more conservative investment portfolio.
Titan does offer some transparency in that you are always able to see what stocks your money is invested in. In addition, your investments are backed by the SIPC up to $500,000.
While Titan claims that you are free to withdraw money at any time, there are numerous reports of the company making it difficult for investors to get their money back. This may be a now-solved problem from the company’s first year, but it’s worth keeping in mind when choosing to invest with Titan.
It’s also important to keep in mind that Titan Invest is a relatively small company. The firm has $25+ million assets under management which is not very much, especially when compared to Wealthfront’s $11+ billion and Betterment’s $16+ billion. While AUM is not a direct predictor of trustworthiness, there’s some peace of mind knowing a company has a larger client-base.
Who is Titan Best For?
Titan is best for long-term investors who are amenable to risk and don’t want to manage their own money. The fees charged by Titan are high compared to retirement-focused robo-investing platforms, but remain low compared to traditional funds that try to beat the performance of the S&P 500. In general, younger investors who can wait out the ups and downs of the market over a decade or more are likely to see the best returns with Titan without quite as much risk of withdrawing money at an inopportune time.
- Potentially higher returns than the S&P 500
- Video-based stock research explainers
- Shorts the S&P 500 during downturns to offset losses
- Fully mobile app-based platform
- High-risk strategy can significantly underperform S&P 500
- 1% annual fee is quite high compared to other automated investing platforms
- Some investors reported issues withdrawing money