I just realized that subscription fees are factored into system returns along with trading costs (I know, I’m a quick one). Trading costs makes obvious sense since it basically costs everyone the same amount. The sub fee on the other hand doesn’t make sense to me though since the flat fee means something completely different to an investor with $5,000 vs $50,000. I understand the goal, but the current way of calculating returns based on suggested minimum investment doesn’t give subscribers an accurate estimate of what to expect.
My suggestion is that a simple calculator be put on system pages where potential subscribers can type the amount they hypothetically wish to invest and receive much more accurate historical annualized returns that still include both sub fees and trading costs.
If this is not an option for some reason, I would like designers to be able to raise the suggested starting size.
For an example of how much the current process can skew results, my Super Model SP500 (https://www.collective2.com/details/91753798) is up 7% at the time of this post over 61 days. The suggested starting amount is $5,000 and sub fee is $79/month. This means I’m taking a 1.58% haircut on reported returns every single month. That’s like charging 19% per year of assets without considering compounding effects! So my model has to return 19%/yr to show a 0% return from C2 on the year. Currently my model is returning ~80%/yr including commissions but without sub fees included while the S&P 500 is slightly down over the same time frame. Under the current calculations for sub fees with returns, not all returns are created equal and in some cases can be wildly unequal.
Is there any chance that sub fees can be excluded from return calculations for these reasons? I understand the importance of considering the fees, but think a simple calculator and a warning to consider sub fees when choosing a system would help put all system returns on an equal playing field for the subscribers’ benefit.
Thanks,
Bryan
