Among the myriad applications for artificial intelligence technologies are some uses in the world of financial services, including serving as the foundation for exchange traded funds.
On Tuesday, upstart ETF issuer Qraft Technologies launched two new funds rooted in AI.
Qraft's new ETFs are the Qraft AI Enhanced U.S. Large-Cap ETF QRFT and the Qraft AI Enhanced U.S. Large Cap Momentum ETF AMOM. QRFT is essentially a multi-factor fund with exposure to the quality, size, valuation, momentum and low risk factors.
“To create optimal factor weights, the fund using artificial intelligence (AI) technologies to continuously learn the correlation of factor returns with various macroeconomic and valuation conditions,” according to the issuer.
QRFT could prove useful for investors seeking factor-based strategies because individual investment factors are cyclical and factor timing is difficult. Additionally, the various investment factors are historically loosely correlated to each other, indicating some multi-factor funds can add benefit over single-factor ETFs.
The new QRFT charges 0.75 percent per year, or $75 on a $10,000 investment.
Why It's Important
The QRAFT AI Enhanced U.S. Large Cap Momentum ETF, Qraft's other new ETF, is an actively managed product. AMOM focuses on domestic large-cap stocks that qualify as momentum names.
AMOM “utilizes artificial intelligence to determine how a company's momentum over a certain period would change and/or affect the company's performance over time and recommends a weighting of such company based on its potential for maximum return as compared to other companies,” said the issuer.
The momentum is rooted in the idea that some stocks that have already experienced significant price appreciation can continue delivering upside. AMOM also charges 0.75 percent per year.
There are ETFs dedicated to the AI investment theme and those using the technology. Investors should carefully note what they're getting when considering such funds. In the case of the aforementioned Qraft ETFs, these products use AI capabilities.
Several existing ETFs are also based on AI technology, including the Rogers AI Global Macro ETF BIKR and the AI Powered Equity ETF AIEQ.
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