Everyone is eager to find the best bang for their buck, but would you trust your money to a robot? Well, IBM’s (NYSE:$IBM) Watson supercomputing technology has been used to successfully develop an AI-powered Equity ETF to help you pick the perfect stocks.
The ETF aims to use AI technology to pick the perfect portfolio of 30 to 70 stocks by analyzing more data than humanly possible. It then ranks the potential investments based on their “probability of benefitting from current economic conditions, trends, and world- and company-specific events”. It also identifies which of those picks are most likely to outperform.
But this isn’t just a part-time robot. The AI also continues to analyze 6,000 US-listed companies while it’s building you the perfect portfolio. As of Friday, the top three picks were CIT Group (NYSE:$CIT), Penumbra (NYSE:$PEN), and Genworth Financial (NYSE:$GNW).
The fun itself was founded by a company named EquBot, which is part of IBM’s Global Entrepreneur program. The ETF began as a discussion between the co-founders in an MBA classroom at UC Berkeley’s Haas School of Business.
In August, the combined assets of US ETFs hit $3.1 trillion, increasingly approximately $700 billion in a single year, according to Investment Company Institute data. Many of those companies also employ computers in their investment strategies.
So what makes the AIEQ any different?
Chida Khatua, CEO, and co-founder of EquaBot, said in an October 18th release, “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 for outperformance can be missed.”
During the last three days of trading, the ETF has risen 0.8%. This is double the S&P 500 during the same time frame. The ETF also moves about 193,000 units per day, which is impressive for a fledgling company. By Friday afternoon, it clocked in around $3.2 million in assets.
It goes without saying that something like this will need a longer time frame to properly test. However, if the AI lives up to the hype, the future looks good.
Featured Image: depositphotos/ricochet69
