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The ETF That Crowdsources Its Investment Ideas

Summary

The CrowdInvest Wisdom ETF launched recently with the strategy of using crowdsourcing ideas to fill its portfolio.

Investors use the CrowdInvest app to select if they're bullish or bearish on a stock. Companies with the highest net bullish ratings make it to the portfolio.

The fund's 0.95% expense ratio is high for this type of strategy.

Investors generally experience much lower returns than the market due to poor market timing making this fund likely to struggle.

Smart companies are increasingly embracing the crowdsourcing trend. Businesses are using crowdsourcing to help with just about everything including assessing consumer preferences, determining which new products to launch and assisting with broad marketing efforts. So it makes sense that an ETF would soon begin crowdsourcing its investment ideas.

The CrowdInvest Wisdom ETF (NYSEARCA:WIZE) is a smart beta fund founded with the notion that the overall sentiment of the universe of otherwise independent investors can outperform active money managers and the underlying indices. On the CrowdInvest website's home page is the quote, "Under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them."

Here's how it works. The creators of the CrowdInvest Wisdom Index look to select and balance a total of roughly 35 stocks...


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