Another New Social Sentiment ETF

Last week, a new exchange-traded fund debuted, one which holds companies that receive bullish mentions on social media and other online networks. The CrowdInvest Wisdom ETF WIZE, which debuted Tuesday, refines that concept even further.

Holdings in the CrowdInvest Wisdom ETF are culled from the Crowd-Invest mobile app, which also launched yesterday. The aim of WIZE is to present investors with a portfolio of stocks that are receiving bullish mentions by users of the mobile app, not picks from portfolio managers.

“App users’ bullish or bearish views on stocks determine the selection and weighting of the 35 equities in the rules-based CROWDWIS. CROWDWIS outperformed the S&P 500 during its first year by 147 basis points (January 7, 2015–January 7, 2016). The index was down 0.56 percent for the year ended Jan. 7, 2016 versus the S&P 500 down 2.04 percent on a total return basis,” according to a statement issued by CrowdInvest.

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WIZE tracks the CrowdInvest Wisdom Index (CROWDWIS). Although WIZE is not an actively managed product per se, the ETF is rebalanced monthly in an effort to keep with changing sentiment on the Crowd-Invest mobile app.

WIZE's underlying “Index is designed to measure the performance of a portfolio of securities selected by users of the CrowdInvest Internet Platform (the “Platform”). The Platform is relatively new and may have a small number of users who are responsible for determining the Constituents. Investment decisions made by users may be influenced by a number of biases, resulting in investment choices that underperform the market generally,” noted CrowdInvest.

Holdings And Allocations

Top holdings in the new ETF include Apple Inc. AAPL, Allergan plc Ordinary Shares AGN, Google parent Alphabet Inc GOOG GOOGL and Morgan Stanley MS. Consumer discretionary and technology stocks combine for about 46 percent of WIZE's weight. Healthcare and financial services names combine for almost a third of the ETF's weight.

WIZE's “eligible universe of Index components includes all U.S.-listed stocks with an average daily volume greater than $15 million over the preceding 20 trading days. The top 35 stocks, ranked in order of percentage of net long votes (total long votes minus total short votes), are included on the Index. Weightings for each of the constituents is based on the constituent’s ranking in the monthly vote, with minimum and maximum weights of 1 percent and 4.9 percent, respectively,” according to the issuer.