EquBot, a subsidiary of IBM Global Entrepreneur, has teamed up with ETF Managers Group to launch what is said to be the first ETF powered by artificial intelligence, the AI Powered Equity (AIEQ), on NYSE Arca last week.
The ETF, which holds between 30 and 70 US positions, relies on EquBot’s proprietary algorithms and uses the big data processing abilities of IBM Watson to analyse around 6,000 US stocks. It daily scrutinizes company management and market sentiment, and processes over one million regulatory filings, quarterly results releases, news articles, and social media posts.
EquBot’s approach ranks investment opportunities 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.
“ETFs have made beta ‘smart,’ but with AIEQ we’re looking to make investing intelligent. EquBot AI Technology 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,” said Chida Khatua, CEO and co-founder of EquBot.
“Machine learning is one of the most powerful applications of artificial intelligence. 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 propogated and opportunities for outperformance can be missed,” Khatua added.
“Artificial intelligence is making life better for individuals as its application expands across industries,” commented Sam Masucci, CEO and founder of ETF Managers Group.
The ETF has an expense ratio of 0.75%.