There is no such thing as a “sure thing”, except for death and taxes! But, I am heartened to see a new innovative investment that is currently living up to its marketing hype and investment potential. I am talking about the AI Powered Equity ETF (AIEQ).
I had written about AIEQ on Seeking Alpha, an investment blog where that particular post got 1,200 “hits”, when it launched back in 2017 and wrote blog posts here in 2019 and 2020. Despite my focus on “passive” investing, I was interested in AIEQ since it was “active” in a passive way and had the potential to provide “low-correlated” returns to its benchmark the S&P 500.
As I have previously reported, the benefit to the investor of this ETF is its active strategy guided by artificial intelligence that is insulated from behavioral biases and scours all financial and unstructured (news articles) information as the portfolio management approach. Its investment goal is to outperform the broad equity market (investing in all market capitalization sectors) at a similar level of risk. In theory, it should provide a good low-correlated complement to an index-based approach to portfolio management.
As you can see from the most recent total return chart below, AIEQ has done a good job tracking and beating the S&P 500 index (IVV) over the last year with less risk (one-year standard deviation of return of 32.0% compared to 33.9% for IVV) with cumulative total return of 34.6% compared to the S&P 500 of 18.9%.
Clients with a higher tolerance for risk and a long term investment horizon could benefit from this type of performance. Due to its “go-anywhere” U.S. stock universe, it is able to gain exposures in any sector where it thinks it can outperform the S&P 500. Recent underlying stock holdings in this ETF are popular names like Tesla, AMD, and Alphabet, as well as lesser known names like Enphase Energy, Roku, and Sunpower Corp.