The growing appreciation that human stockpickers struggle to outperform their benchmark indices has helped fuel a massive surge in assets held by passively managed exchange traded funds. Now some companies are hoping to show that artificial intelligence can finally give them an edge.
The technology is fast-evolving but at least two fund managers, EquBot and Qraft Technologies, running dedicated AI-powered ETFs are claiming early success, even though some of their AI models’ decisions might have required strong nerves to implement.
For example, the team at Qraft, which offers four AI-powered ETFs, listed on NYSE Arca, witnessed its technology build a weighting of 14.7 per cent in Tesla in its Qraft AI-Enhanced US Large Cap Momentum ETF (AMOM) in August last year, but when it rebalanced a month later on September 1 it sold it all.