Israeli Start-Up Uses Crowd Sourcing to Rank Mutal Funds
Consumers who are happy to buy everything from hotels to washing machines, movies and cars on the recommendation of online rankings can now do one more thing: invest in funds.
SharingAlpha.com, a TripAdvisor-style platform for investors designed by an Israeli start-up aims to help them make more informed fund picks at a time when low market returns have driven many to give up and simply buy an index tracker.
Co-founded by two brothers from their base just outside Tel Aviv, the platform – launched this week – ranks individual funds according to reviews from professional and retail fund selectors in the same way that TripAdvisor does for hotels.
There are more than 100,000 investment funds on offer globally, but investors can currently only research a fraction of the managers thoroughly, says Chief Executive Oren Kaplan, a co-founder with his brother Yuval, who oversees the technology.
“The manpower that needs to be involved in this, nobody can justify the cost for that. If I had to hire a thousand people on my payroll to do the research, I’d be out of business as nobody would pay for that,” said Kaplan.
SharingAlpha aims to fill that knowledge gap by eventually allowing investors to assess 90,000 funds, he said.
The bulk of early rankings, however, would probably be for the top several thousand funds, Kaplan said. By comparison, fund database Morningstar allows users to search around 4,000 fund analyst reports.
The financial technology venture is one of a number looking to shake up the staid world of investment management in the face of operational pressures fueled by regulatory change.
The platform will allow professional fund selectors at wealth management firms, independent financial advisors and individuals to rank a portfolio of funds, and use their fund-picking prowess as a personal or corporate reputation builder.
Kaplan, a partner at Israeli investment house Meitav Dash and with 20 years experience in the financial services industry, said his firm plans to make money by charging asset managers a fee to use their SharingAlpha ranking to attract investors.
Free to access, it would allow informed views on a fund’s potential future performance to hit the public domain more quickly, thereby helping investors make a more informed choice than if they relied on past performance data only, Kaplan said.
“If a fund manager is not doing their job, here you have an open platform where people can write about that,” he said.
“I came across a fund manager who traveled for four months across New Zealand and nobody knew about that, and he was charging 150 basis points for his management. This kind of information is important.”—Reuters