CrowdInvest is democratizing the asset management industry by crowdsourcing exchange traded funds (ETF's)

1. Crowdsourcing ETF’s
January 2015
Martin Mickus, CFA
CEO
martin@crowdinvest.us
www.crowdinvest.us
Videos:
Commercial:
https://vimeo.com/110275320
Pitch Video:
https://vimeo.com/110815517

2. Bio
1/23/2015 2
Martin Mickus, CFA
• New York Life—3 years as a portfolio manager and research
analyst
• PIMCO—10 years as a portfolio manager and research analyst
• Previously at a hedge fund, merchant banking firm, and
brokerage firm
• MBA Vanderbilt University
• BS Syracuse University

3. Why
The problem
 79.7% of active domestic equity mutual funds underperformed their
benchmarks in 2014.
 Over 70% of active domestic equity mutual funds underperformed their
benchmarks over the past 3, 5, and 10 years.
 Active managers had $301b in outflows over the past 3 years (ETF’s had
$350b in inflows).
 The average active mutual fund charges 1.39% in yearly fees (the average
equity ETF charges 0.44%).
1/23/2015 3

4. What
CrowdInvest
 CrowdInvest’s goal is to crowdsource investment portfolios, specifically
exchange traded funds (ETF’s).
 CrowdInvest’s first phase for collecting data, the CrowdInvest mobile app
went live December 1st.
 CrowdInvest’s first index, The CrowdInvest Wisdom Index, went live January
7th (available on
http://www.solactive.com/?s=crowdwis&index=DE000SLA0RV3 and on
Bloomberg--index symbol “CROWDWIS”)
 CrowdInvest has a signed “Letter of Intent” with its ETF sponsor. Registration
for CrowdInvest’s first ETF based on The CrowdInvest Wisdom Index is
planned for second half 2015
1/23/2015 4

5. Academia
1/23/2015 5
We find that the opinions revealed on [Seeking Alpha] strongly predict future stock
returns and earnings surprises…Together, our findings point to the usefulness of
peer-based advice in financial markets.
Chen, De, Hu, Hwang, “Wisdom of the Crowds: The Value of Stock Opinions
Transmitted Through Social Media”
Johnston, Kang, Wolfe, “Crowdsourcing Forecasts: competition for sell-side
analysts?”
We explore a new phenomenon, crowdsourcing of forecasts…Our results support
the effectiveness of crowdsourcing.

6. FinTech
1/23/2015 6
“Brokerage”
Motif Investing
eToro
Wealthfront
Robinhood
Tradier
“Advice”
Motif Investing
Betterment
Personal Capital
Wealthfront
Wikinvest
“Social”
SeekingAlpha
StockTwits
Scutify
Openfolio
“Social Media Intelligence”
Social Market Analytics
Estimize
RavenPack
Markit
TIM Group
TIP Ranks
“Asset Management”
CrowdInvest

7. App
Comps
StockTwits
Microblogging platform with > 230k members and > 1 million
unique users a month ($8.6 million in funding)
Seeking Alpha
3 million registered members and > 8 million unique users a
month ($7.0 million in funding)
Scutify
Social platform for finance. 50k app downloads in 5 months
(~$1.0 million in funding)
Estimize
Crowdsourcing earnings estimates with 30k members and 4,500
contributors ($2.6 million in funding)
1/23/2015 7

8. ETF
Market
ETF Stats
 The number of ETF’s have doubled since 2007 to > 1,300
 ETF assets of $1.7 trillion were up 25% in 2013
 About 5.7 million or 5 percent of U.S. households held ETFs in 2013
 The average ETF has $1.8 billion in assets ($1.1b ex top ten largest)
1/23/2015 8

9. ETF
Number of
ETF’s
Avg. ETF AUM
(ex-largest)
Broad Market 417 $2.3b ($1.9b)
Consumer 29 $819m ($348m)
Technology 33 $1.0b ($610m)
Health Care 28 $1.2b ($877m)
Energy 44 $1.1b ($827m)
Financials 42 $820m ($397m)
Short Only 55 $167m ($108m)
ETF
Market
1/23/2015 9

10. 1/23/2015 10
Index
Creation
Example
Constraints
Backend Data Index
Stock Symbol Market Cap Percentage ADV
ABT $66,857,102,018 0.189% $226,917,906.57
AIZ $4,589,761,633 0.185% $34,093,400.60
YHOO $46,619,166,577 0.182% $801,792,801.90
FE $16,137,392,950 0.180% $112,805,919.30
CF $14,059,152,555 0.176% $175,825,795.48
SNA $7,753,297,335 0.172% $35,825,843.32
FISV $17,050,789,401 0.168% $92,857,612.17
HRL $13,266,261,896 0.166% $35,533,570.60
HIG $17,362,806,466 0.152% $122,523,969.25
BRK.B $178,547,539,019 0.150% $636,797,783.96
GK $1,351,774,506 0.150% $7,962,913.59
AAPL $623,197,898,400 0.150% $5,504,768,118.47
STZ $17,026,452,552 0.148% $94,686,338.70
CSX $33,335,855,677 0.148% $242,621,745.53
NSC $31,872,512,301 0.146% $261,098,237.10
ROK $14,388,786,460 0.146% $139,806,083.62
JNJ $289,092,118,187 0.146% $847,565,808.62
INFY $35,746,944,529 0.146% $90,681,373.57
POR $2,971,185,439 0.144% $25,634,814.68
DOW $51,232,031,195 0.144% $477,306,298.57
GOOG $170,334,742,479 0.142% $1,087,736,568.44
CMS $9,640,359,670 0.140% $70,903,408.07
IR $16,156,618,495 0.138% $94,050,369.03
AMAT $28,399,223,605 0.138% $306,962,888.04
HPQ $72,024,399,865 0.138% $408,809,255.90
CMCSA $118,764,869,818 0.138% $659,828,683.04
EFX $9,646,922,400 0.134% $43,447,242.31
JWN $14,608,921,075 0.134% $80,768,325.68
HD $133,034,670,983 0.134% $538,279,594.68
LOW $64,435,741,082 0.132% $333,449,459.96
CSCO $138,322,559,376 0.130% $716,092,292.19
DGX $9,578,284,350 0.128% $85,010,000.52
APC $38,105,328,246 0.126% $563,478,106.15
DG $21,066,861,626 0.124% $285,620,183.08
GILD $147,321,072,117 0.124% $2,013,539,416.72
LYB $37,264,716,337 0.124% $492,025,894.65
Ticker Weight
ABT 3.86%
YHOO 3.86%
FE 3.86%
CF 3.86%
AIZ 3.86%
AAPL 3.04%
JNJ 3.04%
BRK/B 3.04%
GOOG 3.04%
DOW 3.04%
INFY 3.04%
CSX 3.04%
NSC 3.04%
HIG 3.04%
FISV 3.04%
STZ 3.04%
ROK 3.04%
HRL 3.04%
SNA 3.04%
POR 3.04%
CVX 2.34%
INTC 2.34%
FB 2.34%
C 2.34%
GILD 2.34%
CSCO 2.34%
HD 2.34%
CMCSA 2.34%
CELG 2.34%
KMI 2.34%
HPQ 2.34%
LOW 2.34%
LMT 2.34%
ACN 2.34%
APC 2.34%

11. 1/23/2015 11
Index Constraints
1. 10 day ADV > $15 million
2. Top 35 names ranked by % of votes
3. Names weighted by % of votes with minimum/maximum
weights of 1.0% /4.9%
4. Turnover 2 or 3 names per month
5. Largest market capitalization resolves ties
Index
and ETF

12. Notables
1. Quality App. The CrowdInvest application was purpose-built by Icreon
Technologies, a global IT consulting services team, to aggregate investors opinions
to construct exchange traded funds (ETF’s).
2. Systematic. Using our quantitative portfolio management experience, the process
from application front-end and back-end; index and ETF construction; and
rebalancing is automated, systematic, and repeatable.
3. Responsible Investing. Using our portfolio construction experience, we
understand the importance of building responsible and investible investment
products by constraining for annual turnover and limiting volatility.
4. Deep Bench. Advisors include a quantitative portfolio manager, a hedge-fund
portfolio manager, the CEO of a broker-dealer, and the CIO of one of the top ten
asset managers.
5. Business Development. In addition to improving functionality of the app,
CrowdInvest plans on launching 6 to 8 Sector, Long / Short ETF’s.
1/23/2015 12

13. 1/23/2015 13
App
Front-
end
Main Screen Menu

14. 1/23/2015 14
App
Results
Wisdom of the Crowd Leaderboard Performance Universe Selection

15. Financials
Income Statement ($thousands)
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1
3
6 6 6 6 6 6 6 6
-
5
10
15
20
-
500
1,000
1,500
2,000
2,500
3,000
Products AUM ($millions)
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Revenue $ - $ - $ 285 $ 713 $ 1,568 $ 2,375 $ 3,563 $ 5,344 $ 8,016 $ 12,023 $ 18,035 $ 27,053
Cost of Service $ 48 $ 135 $ 334 $ 866 $ 1,749 $ 2,390 $ 3,219 $ 3,707 $ 4,563 $ 6,231 $ 8,753 $ 12,543
Gross Profit $ (48) $ (135) $ (49) $ (153) $ (182) $ (15) $ 344 $ 1,637 $ 3,453 $ 5,792 $ 9,283 $ 14,510
Operating Expenses $ 217 $ 132 $ 353 $ 408 $ 410 $ 412 $ 743 $ 903 $ 1,099 $ 1,340 $ 1,393 $ 1,454
Operating Income $ (265) $ (267) $ (401) $ (561) $ (592) $ (427) $ (399) $ 734 $ 2,354 $ 4,452 $ 7,889 $ 13,056

16. 3% 5% 10% 15% 20%
10% $76,423 $105,186
20% $36,816 $41,123 $59,427 $114,338
25% $30,515 $33,115 $42,648 $61,715 $118,914
30% $26,547 $28,310 $34,259 $44,173 $64,003
40% $21,829 $22,819 $25,870 $30,140 $36,547
50% $19,119 $19,768 $21,675 $24,126 $27,395
55% $18,155 $18,700 $20,277 $22,247 $24,780
60% $17,360 $17,827 $19,158 $20,785 $22,819
65% $16,693 $17,099 $18,243 $19,616 $21,294
70% $16,126 $16,483 $17,480 $18,659 $20,073
75% $15,637 $15,955 $16,835 $17,862 $19,075
80% $15,212 $15,497 $16,282 $17,187 $18,243
Valuation
Terminal Growth RateDiscountRate
1/23/2015 16

17. 3% 5% 10% 15% 20%
10% $76,423 $105,186
20% $36,816 $41,123 $59,427 $114,338
25% $30,515 $33,115 $42,648 $61,715 $118,914
30% $26,547 $28,310 $34,259 $44,173 $64,003
40% $21,829 $22,819 $25,870 $30,140 $36,547
50% $19,119 $19,768 $21,675 $24,126 $27,395
55% $18,155 $18,700 $20,277 $22,247 $24,780
60% $17,360 $17,827 $19,158 $20,785 $22,819
65% $16,693 $17,099 $18,243 $19,616 $21,294
70% $16,126 $16,483 $17,480 $18,659 $20,073
75% $15,637 $15,955 $16,835 $17,862 $19,075
80% $15,212 $15,497 $16,282 $17,187 $18,243
Valuation
Terminal Growth RateDiscountRate
1/23/2015 17

18. 1/23/2015 18
IMPORTANT DISCLOSURES
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