COVID-19 Impact: A comparative analysis of social traders vs. Traditional fund managers

Abstract

This study examines the performance and risk characteristics of social traders on the Wikifolio platform compared with traditional fund managers across three market regimes: the pre-COVID period (2018–2019), the COVID-19 crisis year (2020), and the post-COVID period (2021–2022). Using historical daily price data from 67 Wikifolios and 67 traditional investment funds, a range of performance and risk measures, including the Sharpe Ratio, Sortino Ratio, Jensen’s Alpha, Beta, and Value at Risk, were analyzed. The results reveal significant differences between social traders and traditional fund managers prior to the COVID-19 crisis. During the pandemic, however, these differences diminished considerably, and no statistically significant differences were observed in the post-pandemic period. The findings suggest a gradual convergence of performance and risk characteristics between decentralized social trading and professional portfolio management under conditions of severe market stress. These results contribute to the growing literature on social trading by demonstrating that social traders can achieve outcomes comparable to professional fund managers during and after major market disruptions. The findings further indicate that social trading platforms may represent a viable complement to traditional investment products within diversified investment strategies.