Tull said EAM portfolios capture about 84% of the downside and 128% of the upside of equity markets.

“When you have portfolios being updated every two weeks, you can capture the shift out of falling knives and move into stocks that aren’t as volatile or aren’t in the same sector that’s falling,” he said. “That adds a risk management component to the technology.”

Mullaney says the EAM portfolios allow for customization, along with tax-management overlays. And all of the portfolios on the platform charge a fee of 0.45%.

Investing With A.I.
A.I. is no stranger to portfolio management. In addition to ETFs that invest in companies that provide—or benefit from—A.I. and machine learning capabilities, ETF sponsors including BlackRock’s iShares unit, State Street Global Advisors’ SPDR franchise and EquBot (short for equity robot) are among the companies that have launched products that use machines to pick the investment portfolios. Depending on the fund, they employ analytic models that can vary from parsing information in public filings and earnings reports to how many times a company's name appears in news articles or on social media.

These algo-driven funds first hit the market three years ago, and by and large have been greeted by investors with a collective yawn. From an asset-gathering perspective, the most successful such product is the $964 million SPDR S&P Kensho New Economies Composite ETF (KOMP). A number of these A.I.-generated products still have less than $10 million in assets.

Meanwhile, the performance of these products has been all over the map, running the gamut from abysmal underperformance to shining outperformance versus the broader market. Among the stalwarts are the SPDR S&P Kensho Clean Power ETF (CNRG) and  iShares Evolved U.S. Technology ETF (IETC), which have one-year returns of 35% and 29.5%, respectively.

That said, EAM's approach differs from these A.I.-generated portfolios. "We've taken the high-convicion stock picks out of regular mutual funds, so there is a research component that we're leveraging," Tull said. "And if someone believes in it and is willing to allocate money to it, that means a lot more to me than someone who counts how many times Boeing appeared in the news today." 

Kate Sullivan, managing director of capital markets at Accenture, said her firm has spent a lot of time looking at A.I. at investment management firms, and there’s a lot of experimentation in the space. She noted that some firms are looking at it comprehensively while others are making bets on certain capabilities just to see if they can get returns.

“I think the firms that have been more successful have tried to take a specific asset class and identify triggers that align to that group to make sure they can generate something insightful,” said Sullivan, who declined to comment directly about EAM.

Sullivan said A.I. can help automate components of the due diligence and investment management process, but at the end of the day she believes a hybrid portfolio management system involving both humans and machines will be the winning ticket.