As you might been following, SharingAlpha, the first user generated fund rating platform, went live 6 months ago. So far close to 500 Fund Analysts have started rating funds turning SharingAlpha into the world's largest fund rating agency in terms of its number of its Fund Analysts.
So it's quite natural to ask what are the elements behind this dramatic growth. I wish to propose the following 3 reasons:
The main incentive we are providing Fund Analysts is the possibility of building their own personal track record in terms of both fund selection and asset allocation. The fact that a long term track record will become a valuable asset is driving them to start out early. This is a critical element that any new offering should have, especially, a user generated platform which is worthless without an initial number of users.
A year ago I called up my brother and told him about the idea behind SharingAlpha. His vast experience in the technology space together with my background in the Financial Industry was a perfect match. We agreed that I would cover the 'Fin' part and take care of the business development and my brother and co-Founder will naturally cover the 'Tech' part. I strongly believe that co-Founders who complement each other is a key precondition to a successful venture.
SharingAlpha attempts to solve two market failures. First, fund selection is currently dominated by analyzing past performance although this methodology has been proven to be useless in predicting future fund performance. Second, Fund Selectors and Investment Advisors lack the possibility of building their own proven track record.
Due to these market failures, more and more investors are giving up on active management and a growing segment is not willing to pay extra fees for human advisory services. On the back of these market developments, the solution offered by SharingAlpha is gaining plenty of attention and it seems like our launch came at perfect timing.
Time will tell whether we manage to continue growing our community and turning SharingAlpha into a useful platform for investors around the globe. In any case, we are enjoying every step of this exciting journey!