CuteFund is a crowdsourced mutual fund. Like any old-school mutual fund, it buys and sells stocks on behalf of the investors. The main difference is that CuteFund doesn't have fund manager. All the investors can vote for stocks, votes are weighted and averaged, so we buy the best stocks and sell the worst ones instead.
There are certain situations when crowd can do better than experts. Think Wikipedia, which has less mistakes per article than experts-made Britannica. You can check Wikinomics or the book The Wisdom of Crowds by James Surowiecki for those and other inspiring examples, but what we are trying to say is that people tend to know more than they think they know, and together they can make the right decisions.
That's a result of backtesting of our crowdsourcing algorithm, using Wall Street analysts as the crowd. Fund comissions are not included in historical data. Backtest results help to understand the main characteristics of CuteFund, like volatility and return.
Your rating depends on the quality of forecasts you make. If you vote for a stock and your forecast is correct, your rating improves. Ratings can vary from 1 to 100. The higher your rating is, the more influence you have when voting on stocks.
For each stock, we analyse two parameters. First, it's opinion of the crowd and second is potential, which depends on the performance of the stock. Algorithm rates the stock, the higher is the rating, the better is the stock (we suppose). We buy the best stocks to achieve higher returns. Good stock has rating above 50, while the most attractive stocks can have rating above 100.
According to the modern portfolio theory, you can achieve optimal diversity with 20 or more stocks. There are also different studies that prove that, you can check George Y. Wang1's and Yu-Ting Yang's research, for example.
We will charge investors 2% per year with 0,5% distributed back to the top performers. We will also charge success fee of 15% of yearly return which is higher than 10% p.a. That's about two times cheaper than an average 3,37% charged by actively mutual funds in United States, according to Kaching.com analysis.
We will be able to accept investments when we get license. Please stay tuned, we will let you know if you register. The free version of the site is here to stay - you can play with site and compete with the users for free.