ETC & Qraft Technologies Launch a Couple of AI ETFs
Sweta Jaiswal, FRM May 23, 2019
Artificial Intelligence (AI) has been taking over all sectors by storm. It helps enhance almost everything, including advertising, healthcare, robotics, retail, video streaming, gaming and urban development, among many other areas.
From Amazon’s Alexa and Echo, Apple’s (AAPL Quick Quote) Siri, Waymo’s self-driving cars or Google’s (GOOGL Quick Quote) Lens, the application of AI holds the key. In fact, per the International Data Corporation, global spending on AI is forecast to reach near $79.2 billion in 2022, at a compounded annual growth rate of about 38% from 2018 to 2022 (read: 5 Rising Technology ETFs in 2019).
Keeping with the growing AI demand and applications, Exchange Traded Concepts, LLC (ETC) collaborated with Qraft Technologies to launch two AI-driven ETFs — The Qraft AI Enhanced U.S. Large-Cap ETF QRFT and The Qraft AI Enhanced U.S. Large Cap Momentum ETF AMOM.
QRFT & AMOM in a Nutshell
Actively managed by Qraft Technologies’ AI system — AQUA — QRFT and AMOM charge fees of 75 basis points.
QRFT gains dynamic exposure to five factors like quality, size, valuation, momentum, and low risk, which can have impact on the U.S. stock market. In case of this fund, AI is used to identify the correlation of factor returns with several macroeconomic and valuation conditions, thereby creating optimal factor weights.
AMOM uses an AI system to choose large-cap U.S. stocks with exposure to the momentum factor. The stock weights in the portfolio are derived considering a particular company’s ability to deliver maximum return depending on its momentum in comparison to other companies.
Why Pick QRFT & AMOM?
These funds were launched with the aim to beat traditional market indices by improvising quantitative investment strategies using advanced AI technologies. Developers of these funds believe that the utilization of AI will help develop techniques and grab opportunities to earn greater returns which human portfolio managers may miss.
ETF Competition
Per ETFdb.com, AI ETFs basically follow any of the three criterions:
First, the funds may particularly pick companies developing products or services, involved in technological enhancements in scientific research related to AI. Second, funds with a minimum of 25% portfolio exposure to companies spending heavily on AI. Finally, funds using AI techniques to pick individual stocks for portfolios like QRFT and AMOM.
Notably, QRFT and AMOM face tough competition owing to the growing popularity of AI ETFs. Below we discuss a few:
iShares Robotics and Artificial Intelligence ETF (IRBO Quick QuoteIRBO - Free Report)
The fund tracks investment results that correspond generally to the performance of the NYSE FactSet Global Robotics and Artificial Intelligence Index. Notably, the fund provides exposure to companies that could benefit from the long-term growth and advancement in robotics and AI. The fund has 89 holdings with an AUM of $32.7 million. The fund charges 47 bps in fees (read: Here's Why You Should Invest in Robotics ETFs).
First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT Quick QuoteROBT - Free Report)
The fund tracks the investment results that correspond generally to the performance of the Nasdaq CTA Artificial Intelligence and Robotics Index. Notably, the fund provides exposure to companies involved in AI, robotics and automation. The fund has 95 holdings with an AUM of $45.5 million. It charges 65 bps in fees (read: ETFs That Probably Won't Fool You in April).
Global X Robotics & Artificial Intelligence ETF (BOTZ Quick QuoteBOTZ - Free Report)
The fund tracks the investment results that correspond generally to the performance of the Indxx Global Robotics & Artificial Intelligence Thematic Index. Notably, the fund provides exposure to the performance of companies which benefit from increased adoption of AI, robotics and automation. The fund has 36 holdings with an AUM of $1.54 billion. It charges 68 bps in fees.
AI Powered Equity ETF (AIEQ Quick QuoteAIEQ - Free Report)
This actively-managed fund seeks capital appreciation by investing primarily in equity securities listed on a U.S. exchange based on the results of a proprietary, quantitative model. The fund has 124 holdings with an AUM of $134.2 million. It charges 77 bps in fees.
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