INVESTING
28 February 2021
OREN KAPLAN Co-Founder and CEO, SharingAlpha
The TripAdvisor-style fund rating platform for investors
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haringAlpha.com is the first user-generated fund rating platform that has become the world’s largest fund rating agency in terms of the number of fund selectors contributing to its ratings. On SharingAlpha, individual vetted fund selectors are ranked in terms of their talent in selecting funds. They build a long-term provable track record of their ability, enabling them to test their analysis – and if they choose, the raters are able to present their proven track record to existing and potential clients. Since a long-term track record is more meaningful, fund allocators are encouraged to start building a personal proven track record early on. The fact that the SharingAlpha fund selectors determine which funds will be rated, and they give that rating – knowing it will influence their track record – creates a robust model for reliable ratings based on the wisdom of a large number of professional participants, while solving potential conflict of interest present in the traditional rating industry. SharingAlpha offers professional fund selectors a way to improve their career prospects, and to complement their fund research activities by leveraging on insights gathered from a large group of specialists. Beyond a fund selection ranking, allocators have the possibility of building a virtual fund of funds and, in turn, SharingAlpha ranks them based on their performance not only as fund selectors but also as asset allocators. Another advantage that SharingAlpha brings to the market is the possibility to grow to scale more rapidly and effectively. This is done by moving from the current rating model where fund selectors work in silos, to a more centralised approach in which their views are shared on a dedicated platform.
fund managers they want to hear from, which means better-targeted leads through a process that is entirely independent from its fund rating methodology. During the past year, due to the shift toward digital distribution channels, a long list of large international fund providers decided to use SharingAlpha’s services – firms such as Vanguard, M&G, Janus Henderson, Jupiter, Franklin Templeton, Nomura, Hermes, Baillie Gifford, MFS, TCW, Allianz, Robeco and many smaller boutiques. The methodology behind the fund rating Step 1 The fund selectors are asked to rate the funds based on their expectations in terms of the fund’s chances of outperforming in the future. The three parameters on which the overall rating is determined are factors that are expected to influence future performance: • People: The experience and competitive edge of the fund manager and their team • Price: The cost of the fund • Portfolio: The way the strategy is run in terms of risk management, etc. Step 2 SharingAlpha calculates the average ratings assigned by its users to each fund. It’s important to note that only ratings from users that can be identified as professional fund selectors are taken into account. Hence, anyone can technically sign up and rate funds; however, in the fund rating calculation, ratings coming from users that are, for example, non-financial industry members or fund providers, are not included.
DURING THE PAST YEAR, DUE TO THE SHIFT TOWARD DIGITAL DISTRIBUTION CHANNELS, A LONG LIST OF LARGE INTERNATIONAL FUND PROVIDERS DECIDED TO USE SHARINGALPHA’S SERVICES
The shift towards digital distribution SharingAlpha’s revenue model isn’t based on charging fund managers for appearing on our platform; the same chances are offered to all fund managers, be they large international firms or small local boutiques. Furthermore, buyers are empowered to take control of the distribution process by deciding which
Old Mutual Investment Group appoints Naledi as its new MD
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ld Mutual Investment Group has announced the appointment of Tebogo Naledi as its new Managing Director. The company says in a statement that the appointment will see Naledi replace current MD Khaya Gobodo, who will now focus on his role as the overall MD of Old Mutual Investments. Gobodo, until now, held dual roles as MD of Old Mutual Investment Group and Old Mutual Investments, an entity that comprises Old Mutual Investment Group, Old Mutual Alternative Investments, Futuregrowth Asset Management, Old Mutual Specialised Finance and Marriott Asset Management. “The appointment of Naledi will allow Gobodo to apply a more focused lens on growing the overall Old Mutual Investments business,” the statement adds. “With 23 years of experience in investments –
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Furthermore, in order to improve the quality of the aggregate ratings, instead of using an equal averaging of the rankings, a higher weighting is provided to raters that have a better track performance on the platform. Step 3 A fund rating of above three implies that our raters expect the fund to create alpha in the future, which makes this a powerful and unique rating. Funds with an average rating of above four, based on at least 10 professional raters, are entitled to present the ‘Highly Rated Fund’ SharingAlpha rating logo. Fund selection ranking methodology SharingAlpha’s fund selection ranking is determined by professionals’ ability to assess the future performance of the funds relative to a comparable ETF. In a case where the rater expects the fund to outperform the ETF, the overall rating they assign to the fund will be over three. It will be closer to five where they have a strong conviction. Hence, a rating of between one and three is given to funds that are expected to generate negative alpha, and a rating of between three and five is given to funds that are expected to generate positive alpha. On a monthly basis, the ratings are compared with the actual performance of the fund versus the ETF; the closer the prediction with the actual reality, the higher the score will be for this rating. This is called the ‘Hit Score’ by SharingAlpha – they compare the overall average Hit Score of all the funds rated by the member and compare it to other members’ average Hit Scores and rank them accordingly.
mostly in leadership roles within asset management businesses, with 13 of those years spent as either CEO or MD – Naledi has played a significant role in the reshaping of OMIG’s institutional sales and client management capability, having held the role of Director of Institutional Business since May 2018. He has also played a critical part in driving the transformation strategy and actively contributed to the development of the current business strategy.”
Tebogo Naledi, Managing Director, Old Mutual Investment Group
