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Online, Real-time Test of AI Stock Picking?

| | Posted in: Fundamental Valuation, Investing Expertise

Will equity funds "managed" by artificial intelligence (AI) outperform human investors? To investigate, we consider the performance of AI Powered Equity ETF (AIEQ), which "seeks long-term capital appreciation within risk constraints commensurate with broad market US equity indices." Per the offeror, the EquBot model supporting AIEQ: "...leverages IBM's Watson AI to conduct an objective, fundamental analysis of U.S.-listed common stocks and real estate investment trusts...based on up to ten years of historical data and apply that analysis to recent economic and news data. Each day, the EquBot Model...identifies approximately 30 to 125 companies with the greatest potential over the next twelve months for appreciation and their corresponding weights... The EquBot model limits the weight of any individual company to 10%. At times, a significant portion of the Fund’s assets may consist of cash and cash equivalents." We use SPDR S&P 500 (SPY) as a simple benchmark for AIEQ performance. Using daily and monthly dividend-adjusted closes of AIEQ and SPY from AIEQ inception (October 18, 2017) through March 2020, we find that:

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