Covestor Investment Management is shaking up the fund management industry with the launch of an online investment site enabling retail investors with a minimum of $10,000 to trade by replicating the investment strategies of a selection of model managers, Wall Street & Technology reports.

The new website grew out of Covestor.com, a networking site launched in 2007 allowing members to share their trading activity and performance data. Since its inception Covestor.com has garnered tens of thousands of users, the report said, and CVIM was developed to combine the tools of social networking with the transparency of online brokerage.

"You get the active management of say a hedge fund or mutual fund, but you get the transparency and safety of an end account in that you still own the end securities,” Perry Blacher, chief executive of CVIM, is reported to have said.

Furthermore, as investors open an online brokerage account with either TD Ameritrade or Interactive Brokers they are able to see that the trades actually took place in their accounts. Mr Blacher also emphasised the fact that model managers trade in a new account and that their trades are verified; trade information is captured in real time, screened for suitability and then sent to users’ managed accounts, with the whole replication process taking around two minutes.

Investors pay a fixed management fee which varies according to the strategy followed from 0.5 to 1.5 per cent; they are not charged for money sitting in cash. Ten models are currently available for subscription.

"It's a bit like an open-source hedge-fund. Anyone can come in and compete and offer their services. Unlike the expensive unified managed accounts, there aren't a lot of middlemen taking charges here. It's a straight management fee," the report quoted Mr Blacher as having said.