SharingAlpha's Kaplan: The '$100trn failure' in the asset management industry
Embracing fintech could reverse decline, expert argues
The fact that almost all invested capital has been placed in funds based on their past performance is a "$100trn failure" within the asset management industry, according to SharingAlpha's Oren Kaplan, who said it is more important than ever for fund buyers and DFMs to utilise fintech when making investment decisions.
Co-founder Kaplan said it has been proven that investing based on performance track records rarely works, especially given that some fund managers can perform well for several years, meaning their style could suddenly fall out of favour.
"Everybody knows the caveat that past performance is no guide to future returns. It goes beyond a disclaimer - it has been proven not to work multiple times over," he said.
"I understand why people do it. You cannot pick a fund manager based on their sense of humour or what they are wearing - so where else do you go? Past performance is the most widely available metric."
Property investors remain cautiously positive amid value and income decline
In a bid to mitigate this, Kaplan launched SharingAlpha alongside his brother Yuval in April 2016.
The user-generated fund ratings and model portfolios platform means that discretionary fund managers (DFM) and fund buyers themselves can be rated based on their ability to choose funds through their selection track records or virtual fund-of-funds.
"If you see a fund that maybe launched a year ago and does not have a long-term track record yet, but 28 fund analysts have rated them very positively on the platform - maybe because they know the manager and his competitive edge - that improves the process," he said.
The co-founder hopes that the industry's sudden increased dependence on technology will mean asset managers and DFMs learn to embrace fintech rather than see it as a threat to the human element of their jobs.
"What I offer is a digital toolbox - people need comfort. When markets fall by 20% in a week - as we saw in March - people can panic.
"This is why it is perhaps easier to digitise other sectors like banking or insurance," Kaplan explained.
"There will be human involvement forever - not just in picking funds, but also in the diligence process and collecting information. There are a lot of tools out there that improve the lives of fund selectors and fund buyers."
More on Unit trusts/OEICs
Most read
