Artificial Intelligence Continues To Make Its Mark In The ETF Industry

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Includes: AIIQ, ARKK
by: Tom Lydon
Summary

In the investment space, artificial intelligence is increasingly gaining widespread attention for its ability to be a disruptive technology that spans across a variety of sectors, which makes it a viable alternative for exchange-traded funds opportunities.

For one ETF, the AI-Powered International Equity ETF, it's been a year since inception and has already bested its benchmark by 7 percent.

Another ETF to consider is the ARK Innovation ETF.

In the investment space, artificial intelligence (AI) is increasingly gaining widespread attention for its ability to be a disruptive technology that spans across a variety of sectors, which makes it a viable alternative for exchange-traded funds (ETFs) opportunities. For one ETF, the AI-Powered International Equity ETF (NYSEARCA:AIIQ), it's been a year since inception and has already bested its benchmark by 7 percent.

Under the hood, the fund runs on the EquBot Model: a proprietary algorithm with the use of IBM's (NYSE:IBM) Watson. The model analyzes and compares a multitude of data points and international companies on a daily basis to find and optimize portfolio exposures.

AI continues to disrupt the investment management space, prompting many asset managers and investors to rethink the way they invest, research and develop portfolio construction methodologies. EquBot recognized this need for advancement and broke the mold by pioneering a new method combining AI with ETFs.

"As first movers in this space, we experienced some headwind, competing with traditional investing methodologies. But this fund offers a persuasive example of how the cutting-edge technology of AI and machine learning approach can hold its own in the investment management process," says Art Amador, COO of EquBot.

"We are thrilled to be celebrating the fund's one year of trading and offering investors a distinctive way to invest in the international equity market."

Whether society is ready for it or not, robotics, AI, machine learning, or any other type of disruptive technology will be the next wave of innovation. For investors who missed out on the bull market run of FAANG (Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX), Google (NASDAQ:GOOG) (NASDAQ:GOOGL)) stocks, they can look to capitalize on disruptive tech options in 2019 and beyond that.

Disruptive technology is not relegated to certain sectors as it will permeate into all industries in some form or fashion. For example, augmented reality is technology comprised of digital images superimposed over the real world, and its use is primed to drive industry growth - industries like real estate and manufacturing are already putting the technology to use in a variety of ways.

According to the Harvard Business Review, global firm Deloitte identified seven disruptive forces that leaders should understand and incorporate into their strategy for future growth:

  1. Internet of things (IoT): disrupting the labor market and forcing employees to be "tech fluent."
  2. Continued growth of big data via analytics in organizations.
  3. "Cyber-physical world" that focuses on efficiency and the automation of manual tasks.
  4. Automation and higher-level value creation.
  5. The concept of "career" is changing via technology, resulting in a 60-70-year work life with continuous learning and career shifts.
  6. An explosion in contingent work with a distributed talent pool that improves productivity and speed.
  7. Diversity and generational change for the workforce.

Another ETF to consider is the ARK Innovation ETF (NYSEARCA:ARKK). ARKK is an actively-managed fund that invests in domestic and foreign equity securities of companies that are relevant to the fund's investment theme of disruptive innovation.

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Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.