SOURCE: kaChing


October 19, 2009 08:30 ET

kaChing Introduces Radically Better Way to Invest With Compelling Alternative to Mutual Funds

Launches Ability to Invest Like a Genius With Investing IQ, First Metric to Rate Investing Talent Objectively

PALO ALTO, CA--(Marketwire - October 19, 2009) - kaChing, the Web's largest marketplace for investing talent with more than 400,000 users, today unveiled a compelling alternative to mutual funds. An SEC-registered investment adviser, kaChing now enables customers to go online, find the most talented kaChing investors, and invest just like them directly from a brokerage account. As part of today's announcement, kaChing introduced Investing IQ, a first of its kind objective metric to rate and identify "Genius" investing talent. Now, anyone looking for the opportunity to earn superior investment returns can invest like a kaChing "Genius" with one click on or via Facebook.

For the overwhelming majority of Americans who have a net worth of less than $1 million, mutual funds have long been the only choice for active money management. Yet for the last 25 years, there has been no innovation in the $3.7 trillion mutual fund industry, which remains opaque, rife with hidden fees, and devoid of an objective way to evaluate the performance of money managers.

"More than ever in these uncertain times, average Americans deserve a better way to invest," said Andy Rachleff, CEO and co-founder, kaChing. "Anyone who has lived through the performance of the mutual fund industry over the last year will see the advantages of kaChing's radically transparent alternative."

kaChing is the first company to take the Open Source software philosophy of making information free and only charging for convenience, and apply it to the investment business. It does this by allowing its users to add investors to an "Investor Watchlist" and receive, at no cost, immediate notifications when these investors make a trade or post research. Users may use this information to enter a trade manually in their real brokerage account. However, should users want the convenience of automating this process and receiving alerts whenever the investor they follow begins to drift from their historical behavior pattern then they will be asked to pay a nominal management fee.

Investing IQ Separates the Lucky from the Good Investors

Investors in mutual funds can only rely on past return information to evaluate their money managers because that is the only data mutual fund managers make available. However, it is commonly accepted that past returns are not indicative of future returns. kaChing has attempted to solve this problem by introducing Investing IQ, the first objective and data-driven metric to separate the lucky from the good.

The Ivy League endowments, the world's premier evaluators of investing talent, have used their superior investor selection skill to outperform the market by more than 11 percent per year over the past 10 years. Investing IQ is based on the same three factors used by these Ivy League endowment managers to rate investment managers:

     1. Risk adjusted returns -- based on an investor's information ratio
     2. Sticks to strategy -- based on an analysis of how an investor made
     3. Quality of rationale -- based on a kaChing behavioral algorithm
        that measures community response to an investor's research

An investor on kaChing who earns an Investing IQ score of 140 or greater is dubbed a "Genius." kaChing customers can then automatically invest like the Genius by mirroring the Genius's virtual portfolio trades in their own brokerage accounts. Investors who qualify as Geniuses on kaChing range from talented amateurs to investment management firms that have $400 million under management.

"This is the first time I've seen an internet site that is designed to evaluate talent like the best run endowments," said John Powers, president and CEO, Stanford Management Company. "Investors stand to benefit from kaChing's objective and analytical approach, rather than a false reliance on past performance, which we all know is not indicative of future returns."

With today's announcement, kaChing users benefit from the following features not currently available from mutual funds:

--  Radical Transparency: kaChing publishes data on every trade that an
    investor makes and offers customers access to real-time analytics
    previously available only to the wealthy.
--  Investing IQ: kaChing provides the first objective, data-driven metric
    to evaluate investor skill -- modeled after the approach of Ivy League
    endowments -- so customers understand who is truly talented.
--  Real-Time Drift Alerts: No more waiting for quarterly statements;
    kaChing immediately alerts customers about any unexpected Genius behavior.
--  Lower, transparent fees: Unlike mutual funds which can charge
    aggregate annual fees in excess of 3 percent, a large portion of which are
    often hidden, kaChing charges its customers a simple, straightforward fee
    expected to average 1.25 percent annually.

About kaChing

kaChing is an investing talent marketplace where individual investors gain access to the best investing talent on the Web. An SEC registered investment adviser, kaChing enables customers to mirror automatically the trades of kaChing investors who have an Investing IQ of 140 or greater. The company's investors include Marc Andreessen, Jeff Jordan, CEO of Open Table and former president of PayPal, and retired partners from Benchmark Capital and Kleiner Perkins Caufield & Byers. For more information, please visit or add the kaChing application on Facebook, iPhone, or Yahoo!.