EquBot on Wednesday launched its second exchange-traded fund that uses artificial intelligence to actively construct an investment portfolio of equities.
The AI Powered International Equity ETF (AIIQ) focuses on stocks from developed markets outside of the U.S., which differs from the AI Powered Equity ETF (AIEQ) that debuted last October with a mandate to invest in U.S. equities.
With both funds, San Francisco-based EquBot employs a proprietary quantitative, AI-driven model that runs on the IBM Watson artificial intelligence platform. The model scans both funds’ respective investment universe around the clock to identify stocks that can profit from current economic conditions, trends and world events
In the case of AIIQ, the model identifies 80 to 250 companies with the greatest potential to experience price appreciation during the next 12 months.
As of June 5, AIIQ invested in 150 companies and the top five holdings were Toyota Motor Corp., SAP SE, Nippon Telegraph & Telephone Corp., Chubb Ltd. and KB Financial Group Inc., with weights ranging from 3.22 percent to 2.07 percent.
The fund invests across all market capitalizations, and the investment model recommends a weight for each company based on its potential for appreciation and correlation to the other companies in the fund’s portfolio. The EquBot model limits the weight of any individual company to 10 percent.
AIIQ’s expense ratio is 0.79 percent, which is four basis points more than it’s domestic-focused cousin, AIEQ.
Since it launched eight months ago, AIEQ has attracted $136 million in assets under management and is up more than 11 percent, thanks to a run-up in share price since early April that has propelled it to an all-time high.