EquBot, in partnership with ETF Managers Group, has launched the AI Powered Equity ETF (AIEQ) on NYSE Arca, an actively managed ETF where stock selection decisions are guided by artificial intelligence.
The ETF is powered by IBM’s Watson AI engine, a cognitive computing platform capable of analysing vast amounts of structured and unstructured data.
AIEQ is an active ETF built on EquBot’s proprietary algorithms, utilizing the cognitive and data processing powers of IBM Watson, the technology company’s AI engine, to analyse US-listed investment opportunities.
Chida Khatua, CEO of EquBot, commented: “ETFs have made beta ‘smart’, but with AIEQ we’re looking to make investing intelligent. EquBot with Watson has the ability to mimic an army of equity research analysts working around the clock, 365 days a year, while removing human error and bias from the process.”
EquBots’s approach ranks securities based on their probability of benefiting from current economic conditions, trends, and world- and company-specific events, and identifies those equities with the greatest potential for appreciation.
The fund’s underlying technology is constantly analysing information for approximately 6000 US-listed stocks, including company management and market sentiment, and processes more than one million regulatory filings, quarterly results releases, news articles and social media posts every day. The fund’s portfolio is typically expected to consist of between 30 and 70 equities with high opportunities for long-term capital appreciation.
Art Amador, COO of EquBot, said: “With the launch of AIEQ, we’re not only bringing our new fund to market. We believe we’re pioneering a whole new investment category; one that will soon have investors and advisors diversifying their portfolios among passive, active and AI approaches.”
Kahuta notes that the approach underpinning AIEQ also includes machine learning, giving it the ability to automatically learn and improve from experience without being explicitly programmed.
“Machine learning is one of the most powerful applications of artificial intelligence,” added Khatua. “As powerful as many algorithms underlying expensive quantitative hedge funds and other vehicles might be, unless they’re also built with AI and machine learning baked right in, mistakes can be propagated and opportunities can be missed.”
Amador continued, “Everyday, there is more information, not less. That information explosion has made the jobs of portfolio managers, equity analysts, quantitative investors and even index builders more challenging. New technology in artificial intelligence helps solve those challenges and we’re very pleased to be bringing AIEQ to market to make an AI approach to investing available to all.”
AIEQ may invest in the securities of companies of any market capitalization and will have an expense ratio of 0.75%.
Also driven by AI, the passively managed BUZZ US Sentiment Leaders ETF (BUZ) provides exposure to the BUZZ NextGen AI US Sentiment Leaders Index, a selection of US equities which contain significant bullish investor perception determined by current social media analysis. BUZ launched in April 2016 and also has a TER of 0.75%.