AI-Driven Investment Fund Beats Market with IBM's Watson Supercomputer

AI-Driven Investment Fund Beats Market with IBM's Watson Supercomputer

Written on . Posted in AI and Technology.

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The language bot ChatGPT has proven its ability to generate human-like text for various purposes. However, when it comes to creating a portfolio that can outperform the market, ChatGPT falls short and provides generic information, acknowledging its lack of access to real-time stock data.

On the other hand, there's the $102 million AI Powered Equity ETF (AIEQ), launched in 2017, which has been quietly delivering on that request this year. Created by ETF Managers Group in collaboration with fintech firm Equbot, this fund relies on IBM's Watson supercomputer to manage its portfolio.

As of now, the portfolio consists of 114 holdings and has achieved a 10.4% return in 2023, outperforming the Vanguard Total Stock Market ETF, which has gained 5% during the same period.

However, it's important to note that the AI-powered ETF is actively managed, which means it incurs higher expenses compared to the benchmark fund, ultimately reducing the actual returns for investors. The AI-powered ETF charges a fee of 0.75%, while Vanguard's ETF only costs 0.03%. Both funds include JPMorgan and UnitedHealth Group among their top 10 holdings.

According to ETF.com, Equbot's chief investment officer Chris Natividad said that the Watson-powered fund can look beyond conventional market data and extract insights from tweets and earnings calls.

According to Natividad, "We're focused on investment-related data, looking at how these different types of signals impact security practises across different time horizons,"

"The fund's best days are still ahead of it," he continued. And just as ChatGPT's replies will alter and develop over time as more data becomes available, so too will our fund. 

The technology is still making waves across industries, and ChatGPT's parent firm, OpenAI, this month received a $10 billion investment from Microsoft.

BuzzFeed, an online media company, said this week that it intends to use the technology to produce content. Educators are warning about the bot's effects in classrooms, while chipmakers are ready to profit.

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