I put Wikiflolio in the Low Cost Active Alpha category. This is different from Robo Advisers, which is Low Cost Passive Beta.
Put in more exciting terms, Low Cost Active Alpha is the “democratization of Wall Street”. The more accurate term might be “democratization of Asset Management”. My theory is that many people have the ability to invest well if they invest in what they know. It is the old fashioned Peter Lynch principle. They just lack the tools that institutional traders have enjoyed. Since trading data went digital (early 1980s), technology support for traders became very sophisticated; that was the market I operated in for many years. Now that sophistication is coming to the public.
Wikifolio is based in Austria and also markets in Germany. So far their site is only in German. They raised money in June 2014.
The reason that I think Angel List is a game-changer is their Syndicates. It is the background processing to turn a set of individual investments into a portfolio that anybody else can invest in that makes it a game changer. Angel List could work for public markets, but that is not its focus.
Wikifolio offers something like Syndicates:
“Each investable wikifolio becomes a fully-fledged financial product”.
They take this a step further by floating that on the stock exchange:
“all investable wikifolios are listed on a leading stock exchange (Börse Stuttgart)”
OK, that is only on one small regional exchange, but most ground-breaking innovation happens that way in some remote corner of the market that nobody is looking at.
Vienna, where Wikifolio is based, was the last place I thought I would visit on the Fintech City Tour. I think this just shows that innovation is going global and that it can come from anywhere.
I like the fact that Wikifolio is broker neutral. Broking costs are on a path to zero anyway, so why become a broker?
“investors can order wikifolios via an online brokerage account of their choice.”
The Robo Adviser revolution (low cost Passive Beta) is based on ETFs, but Wikifolio also offers individual stocks:
“more than 2.500 stocks and ETFs.”
That is still a tiny universe of stocks, I assume they will be growing this.
Wikifolio also seems to have figured out a distribution model:
“Every trade (including execution price and fees) can be viewed in real-time onwikifolio.com and a network of leading financial partner websites includingonvista.de, handelsblatt.com, wirtschaftswoche.de.”