Investing communities, including WallStreetBets on Reddit, have become a growing trend. Trading transparency is another thing that is being increasingly demanded of money managers. Public, which combines these two themes, has begun gaining traction in the world of investing and Stephen Sikes, the COO of Public, joins the ETF Think Tank to discuss his product and the trends he’s seeing in the marketplace.
What is Public? It’s a platform that Sikes says focuses on helping newer investors build the modern portfolio. Public is a firm that stands for investors, not necessarily traders, and about 90% of those on the platform consider themselves long-term investors. The unique feature is that all trades made on Public are transparent and viewable to all. Public believes that the most important thing is getting people off the sidelines and investing in things that they know, even if it’s just tech or meme stocks, to start. Sikes wants people to explore the full suite of opportunities and let them decide for themselves.
Public’s current user base is a bit of a melting pot, according to Sikes. There are subcommunities focused on things, such as portfolio construction and asset allocation, but there are also others focused more on single stock trading. From novice to experienced, investors can share ideas with each other and learn investing strategies with each other. Sikes describes himself as a pragmatist and wants to focus on making individuals better long-term investors. Public focuses on the long-term investment model and wants to remain aligned with revenue models that incentivized investing, not trading.
Is the goal of Public to have the investing community replace the need for financial advisors? Sikes says not really. He doesn’t want to make individual investors pseudo-advisors, but he does want to make people feel like they’re not going it alone. Retail investors have never had so much information available to them for free and Public tries to provide great research and data to everybody. Sikes wants people to feel like they don’t necessarily need to pay 1-2% a year to someone to give them great exposure to the capital markets.
Other key takeaways:
- Sikes has found that discussing things with newer investors, such as cost, target returns, minimum drawdowns, industry terms and terminology, can be a big turnoff. They usually just want to learn the basics of how to get started and how to pick a stock. Financial education should come later.
- What’s the asset breakdown for equities on the Public platform? For the most part, ETFs still haven’t gotten a lot of attention. Most are still single stock investors. For those investing in ETFs, it’s a barbell curve, just like the larger ETF industry. There are big index funds on one end and expensive thematics on the other.
- Opening a new retail account involves a lot of friction. Investors need to provide bank account information, driver’s license confirmation, proof of address, etc. The thing that gets people over the hump is investing in something they believe in or has a mission behind it.
- Public just recently purchased Otis, an NFT startup that allows investors access to alternative asset classes and fractional share ownership. Sikes believes that offering investors access to things, such as crypto, art, collectibles and NFTs, gives them the opportunity to build an even broader and more diversified portfolio. It’s a flexible way for Public to bring “interesting” assets on to the platform and Sikes acknowledges that it’s a good hook to pull people off of the sidelines.
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