Welcome To The Machine: The AI Revolution Comes To ETFs (Podcast)

Jan. 08, 2020 11:30 AM ETAI Powered Equity ETF (AIEQ), AIIQGOOG, GOOGL, TM4 Comments
Lets Talk ETFs profile picture
Lets Talk ETFs
7.07K Followers

Summary

  • Artificial Intelligence - and the machine learning algorithms that underlie it - is showing up pretty much everywhere these days, so it's no surprise that there's now an AI-powered ETF firm, EquBot.
  • EquBot's founders, CEO Chida Khatua and COO Art Amador, join Let's Talk ETFs to explain the inner workings of their AI Powered Equity and International Equity ETFs.
  • They believe placing artificial intelligence investing strategies into an ETF wrapper offers investors the best chance of obtaining persistent alpha.
  • And while there are reasons for skepticism, the performance of AIEQ and AIIQ versus relevant index benchmarks makes this a story worth watching in the coming years.

Sign up for Let's Talk ETFs on the podcast platform of your choice to make sure you don't miss an episode:

By Jonathan Liss

Artificial Intelligence - and the machine learning algorithms that underlie it - is showing up pretty much everywhere these days from traffic apps and social media content feeds to self-driving cars and the way we shout commands at Siri and Alexa throughout the day. So, it's no surprise that there's now an AI-powered ETF firm, EquBot. EquBot's founders, CEO Chida Khatua and COO Art Amador, met at the UC Berkeley Haas School of Business and bring very different skill sets to the table. Chida has an engineering background and spent nearly 2 decades at Intel prior to founding EquBot while Art worked at Fidelity for 8 years prior to founding EquBot.

They join the latest episode of Let's Talk ETFs to explain the inner workings of their AI Powered Equity (NYSEARCA:AIEQ) and International Equity (NYSEARCA:AIIQ) ETFs - the first actively managed ETFs powered by AI strategies to the market. According to Art, "The reason these funds are active is so they can demonstrate the power of AI to lead anywhere without prior constraints." Adds Chida, "When it comes to AI, there is no 100% crystal ball that can predict returns... we're dealing with increasing the probabilities of our predictions in an ongoing way over time." Without making guarantees of any sort, they believe placing artificial intelligence investing strategies into an ETF wrapper offers investors the best chance of obtaining persistent alpha at a reasonable cost. And while there are reasons for skepticism, the performance of AIEQ and AIIQ versus relevant index benchmarks makes this a story worth watching in the coming years.

Topics Covered

  • 2:30 - Given your very different backgrounds in tech and finance, how did you end up starting this company together?
  • 4:15 - After years of smart beta indexes and academic approaches to investing, what does AI bring to the table that is new?
  • 8:45 - Welcome to the Machine: Zeroing in on the stock selection process for AIEQ and AIIQ
  • 14:30 - Why roll this out as a low-cost ETF and not as an 'over-priced' Hedge Fund?
  • 16:45 - Are capital markets too dynamic for AI and machine learning at this stage?
  • 21:00 - As AI strategies proliferate, will they not reach a point where they mimic the human investing experience, with some beating the market and others not?
  • 23:30 - How did Alphabet (GOOG) (GOOGL) and Toyota (TM) become the top holdings in your two funds?
  • 25:45 - Factoring in "Black Swan" risks to your models
  • 29:45 - How can you call an AI managed fund "actively managed"?
  • 33:15 - Is there a set number of holdings in these funds or is it open-ended?
  • 38:00 - What about things like annual turnover and tax management?
  • 41:45 - What has AIEQ gathered so much more in the way of assets than AIIQ?
  • 45:00 - What does the future hold for EquBot?

This article was written by

Lets Talk ETFs profile picture
7.07K Followers
Let’s Talk ETFs is Seeking Alpha's podcast dedicated to the exchange traded fund space. Hosted by Seeking Alpha’s ETF expert, Jonathan Liss, the podcast features long-form conversations with industry insiders, ETF issuers, asset managers and investment advisers to explore the ways in which ETFs continue to evolve, helping investors to reach their financial goals.

Disclosure: I am/we are long AIIQ, AIEQ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: For Disclosures, both Chida Khatua and Art Amador are personally long AIIQ and AIEQ. For a full list of holdings, updated daily, listeners can go to https://equbot.com/equbot-etfs/

I, Jonathan Liss does not have positions in any of the stocks or funds mentioned in today's show.

Recommended For You

Comments (4)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.