Why artificial intelligence may not be so smart when it comes to your ETFs

Horizons ETFs Management Canada Inc. is recalibrating its artificial intelligence (AI) exchange-traded fund (ETF) after a year of underperformance that was a "complete disappointment," according to the provider's chief executive officer. The Horizons Active A.I. Global Equity ETF (MIND), which uses a proprietary AI-directed selection process to invest in major global equity indexes through a basket of ETFs, has trailed the market over the past year, down 1.04 per cent on a return basis, versus a positive total return, in Canadian dollar terms, of 5.76 per cent for the MSCI World Index. "We have been looking at MSCI World, and we're significantly underperforming on a year-to-date basis," Horizons Canada CEO Steve Hawkins said. "When we first launched this product, we had very high hopes. People would ask how well this could outperform the market. All the back-testing we did provided us with a lot of comfort that an unbiased AI system making investment management decisions would outperform the market when you're dealing with a lot of investor bias."