A New Naked Fund Is Born

03/19/2001

IPS Funds has launched its iFund, another variation in the so-called "naked mutual fund" genre. Naked funds were born on the Internet, and are based on the notion that investors in the fund should be able to view the manager's buy and sell decisions in real time, like Metamarkets.com's OpenFund, or even participate in the investment decisionmaking process like Stockjungle.com's Community Intelligence fund. Other firms, such as WeVest, Mutualminds, and Marketocracy, have also announced plans for their own "shareholder-managed" funds.

The iFund is a managerless fund that picks stocks based on the "collective intelligence" of its shareholders. Shareholders nominate and then vote on stock picks on the IPS Funds web site; IPS executes the trades and provides research. The fund is intended to be a multi-cap growth stock mutual fund with a focus on "disruptive technologies," companies that seem capable of upsetting the established order of things in some way. IPS says these stocks will grow three times faster than the S&P; 500 in the coming years.

While the idea of shareholder-managed funds seems far-fetched to some, IPS Funds cites a chapter from net visionary Kevin Kelly's book Out of Control, entitled The Collective Intelligence of a Mob. This fascinating concept makes it seem like IPS Funds just might be on to something. But if they're not, then shareholders will be the ones who stand to lose more than the shirts off their backs.

Digital Doug Home       Digital Doug Archives       Subscribe to E-mail List