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.

The debate between active and passive portfolio management has been going on for years. Is it more profitable to try and select stocks yourself, constantly seeking to maximize edge by buying and selling based on market conditions, or is it more lucrative to have longer holding periods and less turnover, regardless of market fluctuations? Artificial Intelligence ETFs could be the answer. "Active management has been out there for a long time, and under performing. They haven't found a solution yet. And I think the technology that I run into is going to help the marketplace to do that," said Procure Holdings President Robert "Bob" Tull on CNBC.

"AI will probably most likely lead to the end of the world, but in the meantime, there'll be great companies." If investors are looking for that one great AI company that will also end the world, then they should forget Alphabet or Amazon. I'd put my money on the Japanese firm Cyberdyne Inc. Why? Because it bears the same name as the company that created the Skynet AI in the Terminator films. Skynet fulfilled Altman's prophecy before he made it, albeit on the silver screen, and wiped out human civilization.

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."

Artificial intelligence and machine learning could be the next frontier for ETFs to outperform the market. So says Robert Tull, President of ProcureAM, an innovative exchange-traded product firm and wholly owned subsidiary of Procure Holdings. A veteran in the business, Tull has been involved in the ETF industry for decades, creating more than 400 ETFs across 18 different countries. Now, he's looking at new ways to beat the market by using big data as raw material, combined with machine learning, to build ETF portfolios that could potentially outperform active management -- even actively managed ETFs. "Active management has been out there for a long time, underperforming," he said on CNBC's "ETF Edge." "They haven't found a solution yet, and I think the technology that I've run into is going to help the marketplace today."

Artificial intelligence has myriad applications and that includes some in the investment world. Some exchange traded funds are even backed by AI capabilities. The AI Powered Equity ETF (NYSE: AIEQ) is one of the original AI-powered ETFs. "The underlying fund investments in AIEQ are based on the results of proprietary quantitative models developed by Equbot with IBM Watson artificial intelligence," according to the issuer. Investment strategies rooted in technology, machine learning and related fare aren't new concepts, but simply leaving things to computers doesn't ensure guaranteed success in all market environments.

Is artificial intelligence the next hot thing in ETFs? One big-name investor seems to think so. On Friday, ETF Managers Group filed for the Rogers AI Global Macro ETF (BIKR), blending two popular elements in finance--Jim Rogers and artificial intelligence. BIKR will track an index of single-country ETFs that was developed by Ocean Capital Advisors, a company headed by Rogers, the famous commodity investor and author of several best-selling books on the topic. Rogers' Ocean Capital will also act as the sponsor of BIKR.

EquBot, the company behind the AI Powered Equity ETF (NYSE: AIEQ) that runs on the Watson platform, is taking its artificial intelligence capabilities international with a new exchange traded fund. The AI Powered International Equity ETF (NYSE: AIIQ) debuted Wednesday. AIIQ is actively managed and holds ex-U.S. developed markets stocks. EquBot launched the AI Powered Equity ETF in October. The product has gotten off to impressive start, as highlighted by its $137.63 million in assets under management.

The artificial intelligence ETF is going global. The AI Powered International Equity ETF, ticker AIIQ, debuted Wednesday, according to a statement from its creator, EquBot. The exchange-traded fund is the first to use AI technology to pick stocks from developed markets outside of the U.S. It arrives about eight months after San Francisco-based EquBot's first product, the AI Powered Equity ETF, ticker AIEQ, which has gathered almost $140 million in assets. The same software that underpins AIEQ's stock selection system and runs on International Business Machines Corp.'s Watson platform will drive AIIQ. The ETF will create a portfolio of between 80 and 250 stocks -- choosing from more than 15,000 companies across the globe.

Consumer stocks are the new dividend kings according to two new exchange-traded funds that use artificial intelligence to predict which U.S. and Canadian companies will boost their payouts the fastest. Bristol Gate Capital Partners Inc., a Toronto-based firm with about C$1.1 billion ($850 million) under management, developed a platform to forecast dividend growth that's evolved in the past decade from a "souped-up Excel model" to a machine-learning algorithm supplemented by fundamental analysis, said President Michael Capombassis. The algorithm looks at roughly 500 factors to determine what drove dividend growth over the past 20 years and to predict what companies will exhibit those factors in the coming 12 months. Bristol Gate's portfolio managers then apply fundamental analysis to choose the funds' holdings from the model's recommendations. "The core theme behind our strategy, and this is backed up by our research and by our testing, is that if we could identify the highest dividend-growth stocks in the market in the coming 12 months, and we broadly built a portfolio around those stocks, then over time we would outperform the market with lower downside risk," Capombassis said in an interview at the firm's offices.