Artificial intelligence will be one of the enduring themes that will no doubt spill over into 2020 as more businesses begin to utilize the technology as part of their core businesses—ETF providers included. One firm, Equbot, has a pair of funds that are worth of look, particularly if investors want domestic exposure, international exposure or both—AI Powered Equity ETF (NYSE Arca: AIEQ) and the AI-Powered International Equity ETF (NYSEArca: AIIQ).
AIEQ is actively managed and invests primarily in equity securities listed on a U.S. exchange based on the results of a proprietary, quantitative model developed by EquBot that runs on the IBM Watson™ platform.
AIEQ fund facts:
- First and only actively managed ETF to fully utilize artificial intelligence as a method for stock selection
- Harnesses the power of IBM Watson
- The system mimics a team of 1,000 research analysts working around the clock analyzing millions of data points each day
- Previously only available to hedge funds and professional trading firms, this method of stock selection is now available as a prepackaged solution in an ETF
“It’s powered by IBM Watson,” EquBot co-founder and chief operating officer Art Amador told CNBC’s “ETF Edge” in an August episode. “The idea is to recognize patterns across management teams, across financial statements, across news [and]things like social media, to identify trends that are occurring in the marketplace and to capture the companies that are going to appreciate the most over the next six to 12 months.”
“What we care about is how the market is pricing the various companies, the various industries,” he added. “So, as the data changes, news or financials might become more important. We care about what’s being rewarded in the market.”
AIIQ is also an actively managed and seeks to achieve its investment objective by investing primarily in equity securities of companies in developed markets outside the United States based on the results of the EquBot Model. AIEQ is up 28.47% and AIIQ is up 28.34% year-to-date—both based on Morningstar performance numbers.
Powered by an AI-based platform, both funds still retain the benefit of ETFs where investors can see the platform’s positions.
“Because this is being refreshed potentially on a daily basis, knowing what’s inside it [and]having that transparency can help an investor to understand what’s shifted day to day, week to week, month to month, because it is really driving the underlying holdings for the performance of the ETF,” said Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA, during the same episode.
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