New-York based company CrowdInvest, the creator behind the stock sentiment rating app, has launched a new exchange traded fund that tracks the performance of US equities with the most bullish sentiment as determined by an independent, diverse crowd. The CrowdInvest Wisdom ETF (NYSE: WIZE) attempts to provide superior returns compared to similar US market cap-weighted benchmarks.
The CrowdInvest Wisdom ETF tracks the performance of 35 US equities which scored the highest net long votes in the sentiment monitoring mobile application CrowdInvest.
The app asks users to state whether they hold a bullish or bearish view for a particular stock and use the cumulative responses to approximate the population’s outlook for those securities.
App users’ bullish or bearish views on stocks also determines the selection and weighting of the final constituents of the ETF’s underlying index, the CrowdInvest Wisdom Invest. The top 35 stocks, ranked in order of percentage ‘net long votes’ (total long votes minus total short votes), are selected for inclusion, while each is weighted according to its relative percentage net long votes. Minimum and maximum weights of 1% and 4.9% are applied. The ETF rebalances on a monthly basis to allow its constituents to more closely reflect the most current views of the crowd.
“WIZE is a smart-beta product in that it provides an alternative weighting to broad US stock market exposure and the ETF puts the average investor in a position to own an investment that they can influence themselves,” said Martin Mickus, Founder and Chairman of CrowdInvest. “Investors can incorporate WIZE into their portfolios by reallocating some of their core S&P 500 holdings into this fund. Additionally, people can look at WIZE as a tool to demonstrate their frustration with the underwhelming performance of the average portfolio manager.”
“WIZE incorporates a strategy that focuses on the crowd; it captures the natural opinions of these independent and diverse individuals, and demonstrates that their opinions as a group has the potential to outperform that of traditional portfolio managers,” added Annie Wyatt, CEO of CrowdInvest. “The purpose of CrowdInvest is to capture tomorrow’s trends of the digital and tech industries, and apply them to an investment product that anyone can access. As part of the crowd, investors collectively contribute to the construction of a competitive index and investible product. As evident in (the index’s) first year of performance, the many certainly have the potential to outperform the few, which is a testament to the legitimacy of the Wisdom of the Crowd theory.”
As of the beginning of April, the fund has significant sector exposure to the consumer cyclical (25.4%), technology (20.8%), healthcare (17.7%), financial services (14.8%) and consumer defensive (7.2%) sectors. The top holdings include Apple (4.9%), Allergan (4.9%), General Growth Properties (4.9%), Google (4.9%) and H & R Block (4.9%).
The fund’s total expense ratio is 0.95%.