Techcrunch reports that Covestor now collectively manages 100 million Dollars. I have not beenable to verify this. However, the initiative is interesting as it fits into a line of initiatives in the financial industry where communities turn to themselves for advise and finance. We have already seen some initiatives of P2P banking: Zopa (UK), Prosper (US) and the Boober (NL). It will be interesting to see if serious P2P insurance initiatives will take of. They did in the 19th century in small communities amongst farmers. It would fit perfectly in the current ‘social web’ trend.

The social investment community is summarized by Techcrunch as follows: “A bunch of investing sites, from Motley Fool CAPS to Social Picks to MarketWatch, let investors create fantasy portfolios and track their performance. The idea is to compete against each other, celebrity investors, and the overall market. The best investors, whether pros or schmoes, rise to the top and collect a following. It’s the online version of the old stock-picking newsletters. One of the most recent additions to this group, Covestor, takes the idea one step further. It links your online portfolio to an actual brokerage account. So there is real money at stake. Since the site’s launch in June, all of the members who have signed up now collectively manage $100 million worth of their own funds.”

The idea is that eventually, the best investors will emerge, and Covestor plans on creating ways to invest in their “funds.” They are actually just going to be selling the data and linking it to the brokerage accounts of people who choose to be followers. The investing stars who arise from this social soup will be able to offer their trading data for a fee once they build a track record or give it away for free and enjoy the notoriety of being an investing whiz. Covestor will take its cut as a management fee. The New York City startup has raised angel money from the founders of Seekingalpha, Betfair, Tribe.net, and Wallstrip.”