KaChing, which is the most popular investing application on Facebook (previously called FSX), just took a major step in that direction by becoming a registered investment adviser with the SEC. Sometime in the second half of next year, it will allow its members to link their brokerage accounts to the portfolios of the elite managers on the site and automatically follow their trades.
Competing social investing sites such as Cake Financial (which launched at TechCrunch 40), Covestor, and PersonalRIA (which launched at TechCrunch 50) all have the same plan. All of these sites want to disrupt the current mutual fund industry by broadening the spectrum of potential money managers.
Carroll says that risk is taken away by forcing everybody to be open about their investment strategies and showing their entire holdings and each trade as it happens. In other words, the data doesn’t lie.
Very cool. Imagine something like that in India. Well, we did think of (and even try to build) some parts of it at Moneyoga but ran across a whole range of issues: low Internet penetration and/or PC usage, less overlap between Internet users in India and traders/investors, data cost & accuracy, etc. But there are other sites (Khelostocks, MoneyVidya, etc.) attempting this stuff for Indian markets.
The bigger point is how the success of this model will impact mutual fund managers. No more free rides on investors’ money?