[HN Gopher] Show HN: Double - Design and invest in your own stoc...
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Show HN: Double - Design and invest in your own stock index
Hey everyone, we're JJ and Mark from Double
(https://double.finance). Over the past few months we've been
working on an investing app that lets anyone design and invest in
their own stock index. Start by picking one or more strategies.
You can find 20+ starting points in Double that vary from direct
index versions of classic ETFs (like SPY) to strategies focused on
specific industries, market trends, or themes (like YC public
companies). You can also easily build your own grouping of stocks,
and tilt your strategy towards or away from certain stocks or
sectors. Once you've chosen your portfolio, we run a daily
portfolio optimization to determine what trades to make, which
considers taxes, trading costs, drift and holding costs[1]. If your
account is sufficiently diversified, we enable Tax Loss Harvesting
as well to capture losses that can help offset capital gains[2].
Finally you can move between strategies either all at once or over
time[3]. JJ started work on this after selling his last company,
making some money, and growing really frustrated at the quality of
the portfolio tools available to retail investors. Financial
advisors have tools for direct indexing, tax loss harvesting and
dollar cost averaging, but they generally charge upwards of 1% a
year in AUM fees. Things like Parametric[4] and Canvas[5] have
succeeded, but are only accessible through advisors. We wanted to
build these kinda advanced portfolio tools for ourselves without
any AUM fees. Some common use cases we've found are diversifying
away from a large RSU position or migrating between risk on and
risk off strategies over time. You can also easily allocate a
percent of your portfolio to specific baskets of stocks. Let us
know what you think! Feel free to email us at
founders@double.finance as well [1] More info about our optimizer
here https://help.double.finance/en/articles/9718142-portfolio-
op... [2] More info about out direct indexing tax loss harvesting
here https://help.double.finance/en/articles/9718959-direct-
index... [3] More info about out dollar cost averaging here
https://help.double.finance/en/articles/9718389-dollar-cost-...
[4] https://www.parametricportfolio.com/ [5]
https://canvas.osam.com/
Author : jjmaxwell4
Score : 110 points
Date : 2024-08-14 14:42 UTC (8 hours ago)
| presson wrote:
| Very excited to try this out.
| thebmax wrote:
| I'm JJ's brother and an investor in Double so I'm a little bit
| biased but I believe reducing/eliminating AUM fees is a huge net
| positive for the world. The performance drag over long term that
| money managers charge is a tax on people's retirement savings.
| What Vanguard/Bogle did with Index funds was massive, and I think
| Double can be this generation's Vanguard. Professional and
| powerful money management tools with rock bottom/no AUM fees is a
| massive opportunity. Congratulations on the launch JJ and Mark!
| erdosjr wrote:
| > Double is only available to US residents.
|
| I would have loved to see that message on the Sign Up page before
| I enter my email address.
| jjmaxwell4 wrote:
| Thanks for the feedback, we will try and make this more clear
| for Non US IPs.
| layer8 wrote:
| US residents != US IPs
| ojbyrne wrote:
| Indeed, some US residents do travel outside the country
| occasionally.
| jjmaxwell4 wrote:
| Oh for sure, we just plan on showing a banner if the IP
| is non US. You can still fill out the application if your
| IP is non US.
| layer8 wrote:
| And non-US residents occasionally use US IPs.
| jeffwass wrote:
| US Residents? What about US Citizens living abroad?
| makrmark wrote:
| No unfortunately we do not currently support US citizens
| residing abroad. There are a few restrictions on opening an
| account, namely: must be 18 years old or older, has a U.S.
| social security number, a permanent U.S. residential address
| and phone number, and currently resides in the U.S.
|
| Feel free to check back here for updates
| https://help.double.finance/en/articles/9457976-who-can-
| open...
| akrymski wrote:
| Congrats! How does this perform against VOO if you take tax
| harvesting into account?
| jjmaxwell4 wrote:
| We're working on backtesting our specific version of TLH over
| the past 10 or 20 years, which mean I unfortunately can't
| comment on that yet.
|
| For reference, other TLH providers generally claim 1-2%
| increase in after tax returns.
|
| https://www.wealthfront.com/blog/how-wealthfronts-tlh-pays-f...
| https://frec.com/resources/blog/why-you-should-leave-tax-los...
| pants2 wrote:
| This looks very cool - but I'm hesitant to sign up without
| knowing how you make money. Is it PFOF? Transaction fees? Flat
| fee?
| RandomCitizen12 wrote:
| Typically an ETF takes a management fee of 0.1-0.5% of assets
| per year. I expect this build-your-own-ETF to do the same, with
| fees on the higher side.
| pants2 wrote:
| They specifically say no AUM fee.
| jjmaxwell4 wrote:
| We eventually will charge a monthly fee as described in our
| Form CRS, but we are waiving this fee for the time being.
| Eventually we plan on making money like Robinhood, M1 and other
| commission free trading pioneers. This means PFOF, Stock
| Lending, line of credit and other potential revenue sources. We
| are not currently offering these products. Please see our
| website for more details and our disclosures:
| https://double.finance
| pants2 wrote:
| What will be the structure of that upcoming monthly fee?
|
| I'm not interested in investing my time and money getting
| onboarded with a service unless I know the long-term fees are
| going to be amenable. If it said something like, "$15/mo and
| free for the first year" I would be on board.
| nekitamo wrote:
| This is great, exactly what I was looking for, but how do I know
| I can trust you? I'm a bit hesitant to wire large amounts of
| money to a startup.
|
| Also, how do you make money?
| jjmaxwell4 wrote:
| 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 eventually will charge a monthly fee as described in our
| Form CRS, but we are waiving this fee for the time being.
| Eventually we plan on making money eventually like Robinhood,
| M1 and other commission free trading pioneers. This means PFOF,
| Stock Lending, line of credit, etc. We are not currently
| offering these products. Please see our website for more
| details and our disclosures: https://double.finance
| nekitamo wrote:
| Great answer, thank you.
|
| Another question: do you guys support trading of fractional
| shares in these custom indexes? If so, what's the smallest
| supported share % (eg 1%, or 0.01%)?
| jjmaxwell4 wrote:
| Yes we support fractional shares!
|
| The fraction of a stock you can buy is currently based on a
| dollar amount. In our case right now it's $5.10 per stock
| ($5 with $0.10 of room to allow for fluctuations in
| prices). We are looking to lower this over time though and
| as our daily trading volumes grows this should come down
| significantly.
| daxaxelrod wrote:
| Love 4.
| dzink wrote:
| 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.
| ahtihn wrote:
| Why would you care about PFOF as a retail investor? You're
| benefiting from it.
| dmoy wrote:
| IBKR, vanguard, and I think even Bank of America also don't
| do PFOF.
| Arch485 wrote:
| Are there plans to allow residents of other countries? (namely
| Canada in my case)
| jjmaxwell4 wrote:
| Unfortunately this is not on our immediate road map. Sorry
| about that. I'm Canadian myself and I really wish we could.
| RandomCitizen12 wrote:
| Do you plan to offer subscription-based access to other users'
| indices?
| jjmaxwell4 wrote:
| At this time no but if you have a index or strategy you want to
| see on Double please email me at founders@double.finance
| jsonis wrote:
| SV money and banking relationships don't prevent a total
| meltdown, as seen in the Andreessen Horowitz-backed Synapse saga
| with Evolve.
|
| Assume there's just a 0.1% of a meltdown and you're better off
| sticking to Vanguard ETFs.
|
| https://archive.is/G3cYF
| nyrulez wrote:
| This is cool. There is a lot of hesitation to move significant
| assets from my Charles Schwab brokerage account. That's going to
| be my main hurdle. I need to understand the safety, trust,
| trading mechanics, flexibility that I have with Charles Schwab,
| all of those things become very valuable when talking about high
| amounts for retirement purposes. I don't really know what you can
| do there to attract such clients? Will anyone move $5m from their
| top tier brokerage to Double yet?
| jjmaxwell4 wrote:
| "Will anyone move $5m from their top tier brokerage to Double
| yet?"
|
| I have!
|
| But I understand that yes this is a hard thing to get people to
| move and trust, safety and trading mechanics are incredibly
| important. We are trying to be as transparent as possible on
| all those factors. I would love for you to try us out with a
| smaller amount first to see observe all the mechanics before
| making a larger move. We support full and partial ACATS
| transfers of existing stock positions (meaning you don't have
| to sell anything).
| TuringNYC wrote:
| >> There is a lot of hesitation to move significant assets from
| my Charles Schwab brokerage account.
|
| I'm incredibly double-minded about this. M1 offers essentially
| the same service and they do it very well. I've compared M1 vs
| Fidelity Basket Portfolio (which also offers yet almost the
| same service.) Here are my takes
|
| - M1 is easy to use (mostly, though same super-strange UX
| choices)
|
| - M1 is a pleasure to use
|
| - M1 doesnt fail on the main features
|
| - M1 Baskets of Baskets gets complicated, but understandably
| so.
|
| - Fidelity is better in some ways as it allows trading anytime,
| not just on specific windows as M1 does (this can also be a
| downside for itchy fingers)
|
| - Fidelity Basket Portfolios is broken 30% of the time. Their
| OWN buy function fails any time they cannot get a quote for any
| 1 member of the portfolio
|
| - Fidelity: It is absolutely a headscratcher how, in 2024,
| Fidelity can have trouble getting quotes for liquid public
| stocks during market hours (e.g., the other day, their buy of
| an entire pie failed because they could not get quotes for
| "DVY" which is highly liquid
|
| - M1 fails absolutely miserably on back-office functionality.
| Selling losing lots is almost impossible without major Excel
| wizardry since the accounting info is held separately in APEX
|
| - M1 fails dangerously on things they should never fail on --
| for example setting beneficiaries has been a 4-month journey
| and still remains unresolved. If you dont have a will, get
| prepped for Probate! Worse, the failure is a silent failure as
| it suggests on the UI that beneficiaries are set. You get
| different answers from different people and each wants to help
| you but runs from "complex" issues (in M1's case, they are
| designed to have a single account, so their backend features
| fail if you have multiple accounts (e.g., a RothIRA and a non
| qualified account.)
|
| The dangerous, infuriating, and befuddling experience with
| setting beneficiaries on M1 lead me to stick to the majors
| (Schwab, Fidelity) because at least I can rest assured they
| have the basics solidly figured out. It also makes me very
| hesitant to go to startups for this sort of stuff
| dmoy wrote:
| > accounting info is held separately in APEX
|
| So the good news is that M1 doesn't use apex for clearing
| anymore
|
| The bad news is that... things got worse? After they swapped
| to doing clearing in house, they dropped like a month of
| incoming wires without reaching out at all, until I noticed
| on my monthly login. Turns out that they had changed the
| underlying wire instructions (makes sense), but sent an email
| saying that nothing would change on transfer instructions
| (not true).
|
| Then the next month, they still dropped wires even with the
| correct instructions, because... ???? unknown reason. Again
| no contact, until I reached out and asked wtf. Third month,
| everything worked even though nothing was changed from the
| prior month.
|
| So there's a reason why I won't put more than SIPC worth in
| M1 or any other new fintech. And yes, it's backend
| incompetence as the primary reason.
| dmurray wrote:
| Would you consider making the optimizer available as a standalone
| tool?
|
| I've wanted a tool to do this - set a target portfolio and tell
| me what trades to make, taking into account transaction costs and
| index rebalances. I just want to buy some broad indexes so it
| would be great if I could buy VOO and VWRL and forget about it,
| but ETFs are tax-disadvantaged in my jurisdiction [0] so I tried
| to replicate them manually in spreadsheets. I would consider
| switching brokers to someone who offered this tool, though right
| now you're not available in my area.
|
| [0] https://nationalpensionhelpline.ie/taxation/tax-on-
| investmen...
| jjmaxwell4 wrote:
| I'd love to make some of our tools available outside a
| brokerage relationship, but this isn't something that's on our
| roadmap right now. If you want to chat about how you might be
| able to do this more effectively yourself, please let me know -
| founders@double.finance
| kumarski wrote:
| Been looking for something like this. Well done.
| patorick002 wrote:
| Several years ago, I worked at a company called Motif Investing
| that was conceptually similar this. It was marketed more as a
| "build your own ETF" kind of thing. You could assemble and weight
| up to 30 stocks in a "Motif" and manage it over time. We had some
| of the features you mention as well. I was happy with the product
| and enjoyed working their, but the business never really took
| off. I wish you the best in developing your company!
| jjmaxwell4 wrote:
| Thanks. I know of and have always respected Motif.
|
| Would love to chat about any hard learned lessons along the way
| if you're up for it - founders@double.finance
| ijustwanttovote wrote:
| It's what I want since I've been just DCA with recurring buys on
| Robinhood.
|
| Let me know when you guys plan to hire.
| NathanaelRea wrote:
| 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.
| jjmaxwell4 wrote:
| 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.
| treeform wrote:
| 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?
| jjmaxwell4 wrote:
| 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.
| dkga wrote:
| Congratulations on the launch! Wishing you the best of luck.
|
| Q: why only US residents? Other brokerages in the US take in non-
| US residents (in my case, not even a US person).
| vincefutr23 wrote:
| Can I acat into double?
| jjmaxwell4 wrote:
| Yes, we support ACATS. You can initiate these through the app
| under Transfer Funds.
| clarkdale wrote:
| Are you hiring?
| jjmaxwell4 wrote:
| Optimistically. If you're interested shoot me an email jmaxwell
| at double dot finance
| jkcorrea wrote:
| love it! any plans to allow for sharing custom indexes with
| friends/family (or would that run into regulations)?
| jjmaxwell4 wrote:
| Yes we'd love to allow for sharing and we've got some ideas for
| that already.
| m3kw9 wrote:
| Why not just buy the basket of stocks?
| daok wrote:
| FYI, on Chrome (Windows machine) your home page is missing the
| vertical scroll bar.
| noduerme wrote:
| 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?
| jjmaxwell4 wrote:
| 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...
| pie420 wrote:
| seems like a lot of work, man-hours, and funding just to give
| people lots of different ways to get slightly worse returns than
| SPY
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