Manage Your Own Investment Fund For Free

Automatic Portfolio Management with zero management fees using Arcade Trader

Arcade Trader
6 min readNov 11, 2020

Mutual funds are probably the easiest way to invest for people without a financial background. Statista Research Department reported that “In 2019, 46.4% of the households in the United States owned mutual funds.

First of all, what’s a mutual fund? “Mutual funds are investment funds managed by professional managers who allocate the funds received from individual investors into stocks, bonds, and/or other assets.” — Investopedia

This means the people behind mutual funds do all the work of research and analysis, while you just pay a small fee for their management. Funds are usually balanced every month, quarter, or year based on the previous performance and forecast.

Since mutual fund allocations are public, everybody could easily mimic a mutual fund by just buying and selling the very same stocks in the fund. For example, if you want to invest in the S&P500 without paying the management fee to Vanguard, you could buy shares for all 500 stocks on your own. Every time the fund that you are copying is rebalanced, you just have to buy and sell shares to align your allocation with the fund.

While this could be easy for a few stocks, managing a portfolio of many stocks could be overwhelming. Especially during the rebalancing process, where you have to figure out the changes and buy/sell stocks to be aligned.

Thankfully, Arcade Trader‘s trading platform can handle this challenging task for you. Today we’re going to see how we can use Arcade Trader Free plan to do all the work for us for free. Literally. You no longer have to pay any management fee.

You can start from the S&P500 or any other fund. In this tutorial, we’re going to start from the very successful ARKK (ARK Innovation ETF) that performed an excellent +115.18% return in the last year:

ARKK (ARK Innovation ETF)

1. Create an account with Arcade Trader

In order to subscribe to Arcade Trader, you need a brokerage account with Robinhood, Alpaca, or TD Ameritrade (by Charles Schwab) brokers. If you don’t have an account with one of them, you can open it quickly for FREE and benefit from zero commission trading with all of them. In our tutorial, we’re going to use the Robinhood broker.

NOTE: While Robinhood doesn’t officially support integration with 3rd parties, its API has been documented by the community and is available online. Robinhood could change or restrict its API without notice. For this reason, the support is considered “Not Official.” If you don’t feel comfortable with this, please use Alpaca or TD Ameritrade instead, as both provide stable and official APIs.

Go to Arcade Trader, click “Sign Up” to create a new account. First, fill in the requested information about you:

Then read and approve the terms before connecting to your Robinhood account.

In order to get the authorization token by Robinhood, you need to log in with your Robinhood credentials in the Arcade Trader setup wizard when prompted. Arcade Trader doesn’t store your credentials, but they are used for the authorization request.

Once logged in, Robinhood requires proof that it’s really you. Select SMS or Email as your preferred verification method, and then press “Send Verification Code.”

If you’ve selected SMS, check your phone. If you’ve selected Email, then check your inbox messages. (Note: If there are no messages from Robinhood, please check the Spam folder.) Copy the 6-digit verification code in the popup window and click “Connect” to proceed.

Once verified, you can select which account you want to use with Arcade Trader. If you have only one account, just click “Select” to proceed.

You’re in! Now, login with Arcade Trader (verifying your account the first time) and click on “Portfolio” on the left menu to access Portfolio Management.

2. Get Portfolio Composition

You can start from scratch by editing the allocation you like, but with this tutorial, we’re going to copy the ARKK (ARK Innovation ETF) mutual fund. All the funds publish their composition on their web site. For ARKK, you can find the composition here in CSV format. Download the file and save it on your local drive. Of all the columns contained in the CSV we are only interested in

  1. Symbol or Ticker
  2. Allocation in percentage or weight

The composition for ARKK updated September 2020 is the following:

TSLA 10.09
NVTA 9.52
SQ 6.65
ROKU 5.77
CRSP 5.10
PRLB 3.62
Z 3.22
TWOU 3.02
WORK 2.89
UW 2.83
PSTG 2.74
TDOC 2.66
MCRB 2.56
EDIT 2.24
MTLS 2.09
PD 2.05
ILMN 1.95
CGEN 1.90
SPOT 1.88
IOVA 1.77
NTLA 1.60
VCYT 1.58
TSM 1.53
TWLO 1.52
SPLK 1.50
TWST 1.39
CERS 1.29
DOCU 1.18
PINS 1.15
NSTG 1.09
HUYA 1.08
SSYS 1.07
SNPS 1.01
ICE 0.98
ZS 0.97
IRDM 0.95
FB 0.83
PACB 0.79
NTDOY 0.71
SYRS 0.64
XLNX 0.60
SE 0.50
U 0.50
TCEHY 0.47
XONE 0.29
INSTL 0.15
ONVO 0.07

Now on Arcade Trader’s Portfolio Page, click the “Import” button, click on Upload File and select the file download earlier. The file content will be displayed in the text area and the file is automatically parsed into a table. By default, the “Ticker” and “Weight (%)” columns are selected. If you’re importing a file where Arcade is unable to automatically recognize the symbol and allocation columns, you can manually select them by clicking on the columns.

Now click on the “Import” button and your Portfolio allocation will look like this.

You can see the target allocation has been imported and under each percentage, you can find the operation required to align the portfolio to the target allocation. In this case, the portfolio was empty and there weren’t existing open positions, so it’s always a Buy operation. In case you’re rebalancing the portfolio, you see Sell operations too.

This is just the definition of the portfolio. In order to synchronize it with your brokerage account, you have to click the red “Save and Synchronize” button. Only after that, Arcade Trader will send orders to buy the stocks. Below you can find a screenshot after the synchronization has been completed.

As you can see the Allocation now is close to the Target Allocation. The allocation percentage will be the closest possible to the target percentage based on the amount available in the brokerage account and the prices of the stocks.

3. Mixed Automatic/Manual Portfolio

If you have existent shares in your account that you want to ignore from the automatic portfolio management, click on the button under the “Exclude” column of the symbol you want to ignore, and Arcade Trader will never buy or sell shares of that stock.

This allows double management of your money: one part is managed as a portfolio and the other can be used for some algo-trading strategy or manual investing/trading.

4. Keep your Portfolio Synchronized

To keep your stock portfolio synchronized with the rebalanced mutual fund you’re copying, check how often the fund is rebalanced and repeat the same operation to keep your allocation table updated.

I hope you enjoyed this article about how to create your own fund without spending a penny on management fees.

Have fun with investing,

The Arcade Team

— —

Disclaimer: This article is for academic purposes only. The author is not suggesting using a particular strategy or providing any financial advice. For more information, check our risk disclaimer.