StockJungle.com Shutters Its Community-Based Mutual Fund
The bear market has mauled another creative idea to death: Culver City-based StockJungle.com Inc. is liquidating its StockJungle Community Intelligence stock mutual fund.
The $1.4-million fund, which based its stock picks on ideas submitted by members of the StockJungle Web site (https://www.stockjungle.com), closed the fund Friday and said in documents filed with the Securities and Exchange Commission that it will sell its holdings and distribute the proceeds to investors this week, Morningstar Inc. reported Monday.
“It has become economically unfeasible to continue to operate a mutual fund with such a small asset base,” StockJungle founder and fund manager Michael Witz said in a letter to shareholders posted on the firm’s site. Witz could not be reached for comment.
The fund got off to a roaring start, climbing 37% in the first quarter of 2000, and its assets grew to a peak of $7.5 million in September 2000, according to Morningstar. But the fund’s performance has been in a tailspin along with the Nasdaq composite index for more than a year, and its assets have shrunk.
A retail mutual fund typically needs at least $25 million to $50 million in assets to operate profitably, industry analysts say.
The Community Intelligence fund officially was managed by Witz, but he was supposed to take Web site members’ suggestions into account when picking stocks. That steered the fund toward technology issues just as they were peaking early in 2000.
The fund has lost 54% over the last 12 months, ranking in the bottom 10% of Morningstar’s large-cap growth stock fund category.
StockJungle, a 3-year-old investment chat site whose individual-investor “analysts” used screen names such as joegamble, mathlady and MicroCaptain, earlier had folded its other mutual funds, including an Internet fund and a Standard & Poor’s 500-stock index fund that charged no fees.
Witz’s letter did not outline the firm’s plans.
The Community Intelligence fund was unusual not only for the input that came from members of the Web site but also because it posted daily updates of its entire portfolio online--something almost unheard of in the fund world, where portfolio secrecy is the norm.
Other funds with transparent portfolios also have encountered rough going. Earlier this month, MetaMarkets.com folded its $9.9-million OpenFund, which posted its full portfolio online as well as all stock trades in “real time.”
The concept of community mutual fund management, meanwhile, could resurface.
Marketocracy, a Los Altos, Calif., company, plans to launch at least one new fund in the fall of 2003 to be run by a team of the best performers from the 50,000 virtual portfolios now being tracked at the firm’s Web site (https://www.marketocracy.com), said spokeswoman Stacie Wilkening.
The firm is waiting for the virtual portfolio managers to establish three-year track records, she said.
