It's tempting to see AI as a solution to building a super-success investment engine. After all, if AI can solve text-to-speech or self-driving cars or landing rockets vertically, couldn't an artificially intelligent investing engine with access to all stock market, economy, weather, and trends data vastly outpace human investors and guarantee massive returns? And won't we be able to simply ask Alexa to buy a stock that's going to triple in value in six months? Well, never say never, but it's unlikely. One is that investment AI engines are returning benefits right now, but not Everest-sized performance that will blow your financial socks off and make you fire your investment advisor.
Founded in 2016 by its chief executive, Marcus Hyung-Sik Kim, the Seoul-based firm plans to use the investment to further its expansion into the U.S. and other key markets, said Robert Nestor, Qraft's U.S. CEO. The companies declined to disclose Qraft's valuation. Tokyo's SoftBank is one of the world's largest investors in technology companies, with its Vision Fund and a successor managing a portfolio of more than $100 billion. Asset managers, once skeptical of the value of AI and mindful of their staffs' concerns that the programs would replace human stock- and bond-pickers, are now looking to add data-analysis tools that can help them combat chronic underperformance and justify the fees they charge investors. The industry's awakening has triggered an arms race to hire the programmers who can develop those tools and spot the market signals hidden in the data.
Two new artificial intelligence ETFs launched on the New York Stock Exchange on Tuesday via a partnership between Exchange Traded Concepts and Qraft Technologies. The pair of ETFs are the Qraft AI Enhanced U.S. Large-Cap ETF (NYSEArca: QRFT) and the Qraft AI Enhanced U.S. Large Cap Momentum ETF (NYSEArca: AMOM). Hyung-Sik Kim, CEO and co-founder of Qraft Technologies, said they have been working together with ETC to improve the performance of traditional quantitative investment strategies by applying AI technologies. "As our system is ready to compete in the heart of the global financial market, we feel happy but also feel a sense of responsibility for proving AI's capabilities in the financial market," Kim said. "In the future, we expect AI-enhanced products have the potential to become substitutes for broad market indices if we prove it with our technologies. I would like to thank everyone at Qraft and ETC for their hard work."
The growing appreciation that human stockpickers struggle to outperform their benchmark indices has helped fuel a massive surge in assets held by passively managed exchange traded funds. Now some companies are hoping to show that artificial intelligence can finally give them an edge. The technology is fast-evolving but at least two fund managers, EquBot and Qraft Technologies, running dedicated AI-powered ETFs are claiming early success, even though some of their AI models' decisions might have required strong nerves to implement. For example, the team at Qraft, which offers four AI-powered ETFs, listed on NYSE Arca, witnessed its technology build a weighting of 14.7 per cent in Tesla in its Qraft AI-Enhanced US Large Cap Momentum ETF (AMOM) in August last year, but when it rebalanced a month later on September 1 it sold it all. The ETF began buying Tesla again in November, amassing a stake of 7.6 per cent by January this year, but in the February rebalancing it sold the entire holding once again.