Startups that have built businesses parsing Twitter data to find buy and sell signals on stocks are looking to move into the investment game
Miami-based startup iSentium and New York-based Market Prophit are among the companies looking to bring market sentiment into real-time trading for the ordinary investor.
They are also now looking to launch exchange-traded funds.
Gautham Sastri, CEO of iSentium, told Business Insider he’s working with an investment bank to launch an ETF of his own using social data.
ETFs typically track capitalisation-weighted benchmarks such as the SP500. These capitalisation-based benchmarks have received some criticism in the investing world as they are moved by the biggest, and potentially most overvalued, stocks, and have less exposure to smaller companies which might be undervalued.
Sameer Gupta, a former JPMorgan trading executive who is now chief operating officer at iSentium, told Business Insider that an iSentium ETF would likely “be a smart beta product that delivers enhanced performance relative to a benchmark.”
The phrase ‘smart beta’ refers to an alternative form of index investing where the index in question is based on factors other than capitalisation-weightings.
Market Prophit meanwhile has already developed an index tracking the 25 most-mentioned companies on Twitter in a partnership with S&P Dow Jones Indices.
Igor Gonta, chief executive at the company, told Business Insider that the company will one day launch an ETF that allows people to trade based largely on the sentiment expressed on Twitter.
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