For decades, uber-wealthy people and institutions (such as university endowments) have used hedge funds to protect and grow their wealth. Historically, these high-fee investments were outside the purview of “Main Street” investors. 

However, technological innovation is opening up even those closed-off investments. And more hedge funds are starting to offer “retail investments” for individual investors.

CARL is a new app that’s dedicated to finding the best hedge funds that offer retail investment options. It bundles these funds into a “fund of funds” and allows accredited investors to manage their portfolio of hedge funds.

Investors who are allured by hedge funds, or who want to know more about the alternative investment space, may want to consider the CARL app. We explain the app and the investment options in detail.

CARL is an app designed to give accredited investors access to open hedge funds. All the hedge funds hosted on CARL have a low correlation with the S&P 500. And they are all open to retail investors.

CARL looks and feels like a standard brokerage app. But the assets it offers are not on most platforms. Hedge funds are “alternative” investments that may help guard against volatility in the equity market.

All the funds on CARL share the same fee structure (2% annual management fees and 20% of profits go to the fund manager). Additionally, all funds on the platform are backed by readily valued financial assets. CARL displays the real-time share price and its correlation with the S&P 500 for all funds on the platform. This gives many investors the data they need to make investment decisions.

CARL gives accredited investors access to four hedge funds. Historically, hedge funds have not accepted everyday people as investors in their funds. Part of this is because hedge funds often have long lockup periods and require capital-intensive investments. 

Smaller investors who may need to liquidate are not typically considered ideal investors for most hedge fund managers. However, CARL is working to find hedge funds with retail offerings and attractive returns to promote through the app.

CARL’s main value-add proposition is access to assets that have historically exhibited low correlation with equity markets. Right now, CARL has only three funds in the app. But each shows a low correlation with the stock market over the last few years.

Although many of the funds on the app hold shares of the S&P 500 or the Nasdaq 100, the funds as a whole do not track with the S&P 500.

Investors who already have self-directed IRAs can invest in the funds on the CARL app. However, the app doesn’t currently integrate with particular self-directed IRA providers.

Investors who use CARL can track their portfolio performance in real-time. The funds on CARL hold only financial assets (no real estate, land, etc.) which can be evaluated in real-time. That makes it easy to understand how an investor’s portfolio is performing.

Investors who use CARL can get liquidity on a monthly basis. That’s slower than standard brokers (which allows instant trades and liquidity within days or hours). However, it’s much faster than most hedge funds which often have lockup periods of six months or more.

CARL charges a fee structure that is in line with other hedge funds. Investors will pay a 2% annual management fee and 20% of all profits.

These fees sound astronomical. But most of the funds on the site have target returns above 15% per year. If those targets are achieved (which isn’t guaranteed), the fees may make sense in the long run.

Investors have to invest at least $20,000 in the CARL app’s fund of funds. But investors can allocate that money however they wish. Each fund on the platform has an investment minimum of $2,000.

Typically, when I research any new investment opportunity, I start on the website. This is typically the place to find performance and fee information. However, CARL has an app-first approach. Investors can’t find the PPM on the website but it’s readily available in the app. Likewise, fund performance is easy to find on the app, but difficult to locate on the website.

As long as you’re comfortable investing from your phone or tablet, CARL is fairly easy to use. However, I did find that the registration process was a bit buggy and had some dead ends that were hard to handle if you want to read documents and explore before applying to the account.

My workaround was to uninstall and reinstall a few times while completing the process. Hopefully, that issue will be resolved soon.

All fees charged by CARL and the hedge funds are governed through a Master Private Placement Memorandum. The only way to get to the PPM is to open an account on the app. As mentioned in the last section, I wasn’t able to find this on the company website. 

CARL charges two forms of fees. The first fee is a management fee of 2%. This is a standard management fee and is on par with rates charged by hedge funds. Individuals who are used to investing in low-cost index funds or individual stocks may be shocked by the high management fee, but it is truly considered standard in the industry.

The second fee is a performance fee. When a fund is profitable, the fund manager keeps 20% of the profits. This performance fee is something you would never see in a mutual fund. But, again, this par for the course for hedge fund investing.

Getting in touch with CARL is extremely easy. Investors who want to learn more about the platform can simply request a meeting through CARL’s website. It was in this meeting that I learned that downloading the app would allow me to access the PPM along with fund performance information.

CARL is headquartered in New York. Its address is:
17 John Street
Suite 600
New York NY, 10038

Investors can also email the company at [email protected].

CARL is a unique fintech concept. CARL offers actual hedge fund access to everyday investors (at least those with accreditation). Accredited investors will no longer have to “know a guy who knows a guy” to gain access to hedge fund investments.

Titan Invest app is a wealth management company, not a hedge fund, but it may employ some hedging strategies. Titan Invest charges lower fees and is open to non-accredited investors, but it doesn’t focus as rigorously on non-correlation.

For non-correlated assets, investors may turn to platforms like Willow Wealth, which offer a wide variety of alternative investments. YieldStreet has lower fees than CARL. But the investments may be more difficult to value. CARL’s focus on real-time data is an important point of differentiation for the app. Check out this quick comparison chart:

As an app-based investing platform, CARL limits the number of points of attack. However, it’s still an app that stores personal information which could be hacked. This is a risk shared by all banks, financial institutions, and other companies that collect personally identifiable information.

To process payments, CARL uses a third-party payment processor called Dwolla. This reduces risks for investors since the money is more securely transferred. Of course, investors should note that they can lose money on the platform as the fund’s performance is not guaranteed.

To get started with CARL, you’ll need to open an account by clicking the “Sign In/Get Started” button in the top right corner of its website homepage. You must be an accredited investor, so you will need to verify your investor status and become a community member. 

Once that’s done, you’ll have access to the investing tools inside the CARL app. This will allow you to choose investment strategies and asset allocations that align with your investment goals. 

From there, you just need to save your portfolio settings, and your investment will go live when the next strategy funding cycle begins. 

CARL is a viable alternative investment option for accredited investors who are looking for asset classes that aren’t correlated with the S&P 500. The fees are certainly high. But the funds have trackable performance and high liquidity. These are features investors may struggle to find in other alternative investments.

But non-accredited investors will need to look elsewhere. Even accredited investors who already have a lot of alternative investments such as cryptocurrencies, commodities, and real estate may not need the diversification that CARL offers. 

And, finally, if you’re just beginning to build out your portfolio, you’ll probably want to stick more traditional stock market investments. Compare our favorite stock brokers here and top robo-advisors here.