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.

Humans have always welcomed other beings in finance: over twenty years ago, some of the best Wall Street traders were outsmarted by Raven, a chimpanzee who picked stocks by throwing darts. Her index, called MonkeyDex, became one of the biggest sensations at the turn of the century after delivering a 213% gain. Perhaps because animals are not so easy to fit in offices, people have turned to other kinds of brains to choose equities. Big institutions are resorting to artificial intelligence (AI) to analyse stocks collating all sorts of information coming from a plethora of sources. In fact, while investments could previously be assessed based on financial reports and share price movement – what is called structured data – markets have been heavily influenced by unstructured data over the past few years.