He notes that the WIZE fund sports a trailing 12-month price-to-earnings ratio of 15.57 versus 19.12 for the market cap-weighted SPDR S&P 500 ETF (SPY).
“When I started this, one of my concerns was what value does the crowd have––would they be reactionary or proactive?” Mickus says. “We saw they were very proactive in 2015 because they had very little energy or basic materials going into the year, and this year there’s no exposure [in the index] to either sector, so they [the investing community] don’t believe the bounce in these sectors is sustainable. So it hasn’t been reactionary; I think it’s been very proactive. The names in the index are very diverse.”
The four top sectors in WIZE are consumer cyclical (25 percent), technology (21 percent), health care (18 percent) and financial services (15 percent). Eight holdings are maxed out at the 4.9 percent weighting: Apple; Allergan; General Growth Properties; Alphabet (i.e., Google); H&R Block (which today hit a 52-week low); Microsoft; Oracle and VF Corp.
According to CrowdInvest, the WIZE fund’s underlying index outperformed the S&P 500 index during its first year (January 7, 2015 through January 7, 2016) when it was down 0.56 percent versus the S&P 500 down 2.04 percent on a total return basis.
The fund’s expense ratio is 0.95 percent, which seems high for an index-tracking ETF.
“We had a big cost structure in developing the app,” says Mickus, who adds that while he believes the fund is fairly priced, he hopes to lower the fee over time.
Meanwhile, he says he has high hopes for the wisdom of the crowd, including plans to build sector-based ETFs based on that concept.
“In my opinion, using the crowd is the last bastion of alpha there is in the market,” Mickus says.