What is a Spoke Fund® ?

A Spoke Fund® is a group of separate investor accounts linked to a portfolio containing most of the liquid net worth of that fund’s manager.

“Spoke Fund®” is short for “hub and spoke” model. The portfolio manager’s money is the hub and the spokes lead to each investor’s account. Any changes in the hub are simultaneously made in the spoke accounts. Thanks to technology, this can all be done pretty easily.

I like to think the result is a much more investor-friendly alternative to a mutual fund. I’m biased, though, since I run two Spoke Funds. I also came up with the name “Spoke Fund” because Wall Street didn’t have one for this particular way to invest. It’s not a hedge fund, nor a mutual fund, nor a separately managed account. I think it’s better than them all, for reasons I will soon explain, but, well, there’s that bias thing.

I wouldn’t call it revolutionary. That word comes pretty cheaply these days. I just introduced some new processes to some existing tools to build a fund I’d feel good about putting my family and friends in.

As of today, there are exactly two Spoke Funds® I’m aware of – the Tarpon Folio and Gecko Folio, both run by yours truly at my firm. But I think it’s safe to say our investors love them. I also think Spoke Funds® are an idea that will spread.

In this blog, I’ll be talking more about the benefits of spoke funds for investors. I’m also going to tell any portfolio managers who want to listen exactly how I built them.

So, welcome to Mutual Fund 2.0.

Portfolio managers: check out www.SpokeFund.com for more about how to build a spoke fund.

Cale Smith

About Cale Smith

Portfolio Manager at Islamorada Investment Management.
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