CuteFund is a new Estonian start-up that is trying to reinvent mutual funds – in a nutshell. CuteFund is founded by Andrei Korobeinik, the founder of Rate.ee, one of the most popular Estonian startups. Andrei sold Rate.ee to EMT some time ago and decided to invest his money into stocks. Andrei realised however that investing into stocks through fund managers wasn’t very interesting. Based on this, he decided to found CuteFund – an investment fund run by the community.
From the community, any member can climb the steps to become the most influential analyst/investor. Based on your buy/sell/hold suggestions and how accurate they are, your influence over other community members may rise. The decisions by the community members are transparent and thus it’s very easy to prove your track record in front of the other members.
The service is currently in beta and users can vote on stock performance for free. Andrei Korobeinik has already signed up more than 800 users, who vote on a variety of US stocks. At the moment, CuteFund is still free for all users and members aren’t able to invest real money into the investment fund. The reason is very simple – they’re still lacking the proper license to do so.
However, they’re already running a fund with 20 investments and thus in a very real way trying to find out how a community run fund can perform over a longer period of time. The business model is also made transparent and publicly available. CuteFund will charge users 2% of their investments per annum of which 0,5% will be distributed back to the top performing investors. Also, 15% fee of all annual return over 10% of the fund performance will be charged. Not a bad business model, considering that CuteFund’s costs are nowhere near traditional funds’ costs.