A fund guided by artificial intelligence and lagged the market has dropped a few tech names to set the portfolio right.
IN DECEMBER, the AIEQ or the AI Powered Equity exchange fund sold out its FANG+ positions. Only Apple Inc. was in the top 20 holdings of the fund as per its latest filing. Microsoft Corp, Alphabet Inc., and Amazon Inc. were in the top five in the ETF as of December 1.
As per Bloomberg data, the AI-powered ETF lagged behind the benchmark index, the S&P 500 total return by 9 percent point in 2021.
AIEQ has been continuously shedding its portfolio exposures on Big Tech companies with no one in the top ten positions, according to the Co-founder of DataTrek Research, Jessica Rabe.
Cyber security is the only one overlapping in the top ten holdings, while the rest spans from commercial real-estate to cloud computing, semiconductor, and medical devices.
The fund manager, which is artificially driven and runs 24/7 on the IBM Corp. Watson platform, is not buying into the theory that U.S. tech giants can lead the market higher in 2022. The index of the U.S. FANG+, a barometer for tech mega-cap stocks, have dropped by 7% from its all-time high last month even though S&P 500 index rose to new records.
Advanced Micro Devices Inc., which makes chips, and Palo Alto Networks Inc., solution provider for network securities, is in the fund’s top position as per Bloomberg data.
The $170 million funds, whose model was developed by EquBot, regularly assesses 6000 plus U.S. Public funds traded daily. It goes through millions of regulatory filings, management profiles, news stories, market sentiments indicators, financial models, market data, and valuations. It then chooses 30 to 70 stocks for the fund, managed by the ETF Managers Group LLC.
Since the AIEQ fund was launched in 2017 has given 66% returns. The total return index of the S&P 500 has delivered 102 %
According to Jessica Rabe, it is a good exercise for human fund Managers to track the machine-powered fund’s holdings that have a new approach for selecting stocks for the fund. AIEQ is diversifying its portfolio to different industries and making its capital work. The new approach is in line with the current positive investment mood reflected in the S&P all-time high index.
