Introducing Composer: an automated trading platform that allows you to build a portfolio of hedge-fund like strategies.

Innovation in retail investing has moved at a glacial pace.

The single biggest innovation in asset management in the last several decades was probably the exchange traded fund (ETF): a lower-cost, more liquid, and more transparent alternative to mutual funds. ETFs were introduced in 1993, but still have only a third of the assets under management compared to mutual funds, their antiquated predecessor. [1].

Perhaps even more frustrating to investors is the lack of access to customization and more sophisticated strategies, typically the purview of high-net-worth wealth managers and hedge funds. Large asset managers like Vanguard, JPMorgan, BlackRock and Morgan Stanley are waking up to this frustration by offering direct indexing, which allows their customers to hold a customized selection of individual stocks. While growth in direct indexing has been accelerating, assets under management were still a paltry $350 billion at the end of 2020 [2].

One of the issues with direct indexing is that it’s still a half-measure: it only allows for customizing which assets you hold. It doesn’t offer more sophisticated trading logic to determine when to buy and sell or how much to allocate to each holding. So, more serious investors end up managing their strategies in Excel or Python, each of which poses its own set of issues.

We lack automated tools that allow retail investors to capture hedge fund-like returns.

The vast majority of serious investors who can’t code still manage their portfolios in Excel workbooks and manually enter trades into brokerages. One alternative to Excel is to create custom scripts to automate portfolio management using a language like Python. But even for software developers, this involves a ton of work wrangling the incidental complexity that comes with setting up development environments — complexity that is irrelevant to what people actually care about, which is devising better strategies.

A personal battle to escape mediocrity

Composer was born from personal frustration. After leaving a gig at a startup in 2019, I had some downtime to finally figure out what to do with my savings. I was shocked to find out how limited off-the-shelf retail offerings were. The biggest issue was that I knew too much: I knew that high-net-worth individuals had access to much better investment strategies than those available to me. I simply refused to accept inferior risk-adjusted returns because I didn’t have access to an exclusive club, so I went about hacking my own solution that imitated the strategies of some well-known hedge funds.

At the time, my hacked-together strategies were intended to be little more than a side project. But then I started writing about my strategies, just to be able to share what I was doing with friends and family. Much to my surprise, my friends wanted to invest in my strategies right away. It was clear that the people I cared about didn’t want to accept mediocrity, either.

I didn’t want to be a traditional investment adviser, but I was willing to bet that if I could combine advances in the fintech ecosystem with clever software, there was a way to give ordinary people access to a portfolio of hedge fund-like strategies that they had total control over.

Composer lets you create your own strategies from building blocks using a no-code visual editor — and automatically executes trades on your behalf.

If we strip away the layers of tedium inherent to Excel spreadsheets and broker API calls, what we’re left with is creativity and fun. Developing an investing strategy is deeply gratifying with the right tools and support to take care of the rest.

With Composer, you use a no-code visual editor to create strategies from building blocks (assets, weights, conditions, filters and groups) that can be infinitely combined.

As you’re building, you can backtest how your strategy would have performed in the past using historical data. Learning what would have worked (or not!) helps you adjust your strategy. From our early users, we know this testing and tinkering process can be a fun and healthy new habit.

If you’re not ready to create your own, you can choose from Composer’s growing collection of ready-made strategies. And if the inspiration strikes, you can build on the ideas you see.

Once you create or pick a strategy, you can follow it to see how it performs in real time. Following strategies helps you decide which to invest in. But it also has a powerful, intangible benefit. Over time, you build up an intuition about what types of strategies perform well under different market conditions.

When you invest in a strategy, Composer automatically executes trades on your behalf based on the underlying strategy’s logic. Add another, and another. Soon, you have a portfolio of hedge fund-like strategies trading live. It is magical, even beautiful, to see the system at work. You can monitor your portfolio’s performance in real time and make changes by buying into and selling out of strategies.

Investing that’s fun, stimulating, and creative. Once you experience it, you’ll never want to go back.

New funding to realize our vision

We’re elated to announce that we’ve recently raised $5.35 million USD in new funding led by First Round Capital with participation from Golden Ventures, Not Boring Capital, Basecamp AVG and Draft Ventures. This allows Composer to bring together a team of insanely talented people across multiple disciplines and geographies. We’re still hiring and would love to hear from you if any of our open roles resonate.

Finally, open to everyone

We’ve been working with a select group of people from our waitlist to get feedback and iterate. We’ve received many eager requests from those of you patiently waiting for your turn to experience the power of Composer, and we’re excited that as of today, November 15th, we’re letting anyone sign up to our open beta. Head over to Composer’s website to sign up!

We’re just at the very, very beginning stages of our product development journey and we have a lot of wildly ambitious stuff on the horizon. So sign up and join in!

[1] https://www.wsj.com/articles/mutual-funds-vs-etfs-what-investors-should-know-11625401526#

[2]

https://www.ft.com/content/4cb8fccf-327f-4373-9450-60664a903d50