- As the ChatGPT language bot has gone viral, a Watson-powered ETF is making nearly double the returns of the broader market.
- The AI Powered Equity ETF is up 10.4% in 2023, while the Vanguard Total Stock Market Index is up 5.67%.
- IBM’s Watson supercomputer helps balance the fund’s portfolio holdings.
Popular language bot ChatGPT has shown a human ability to render articles, emails, and even dating app messages. But if you ask it to generate a portfolio that can beat the market, it spits boilerplate information and reminds you that it doesn’t have access to live stock data.
Yet the $102 million AI Powered Equity ETF (AIEQ), launched in 2017, has quietly responded to that demand so far this year. Issued by ETF Managers Group in partnership with fintech Equbot, the fund relies on IBM’s Watson supercomputer to balance its portfolio.
This 114-stock portfolio is up 10.4% so far in 2023, while the Vanguard Total Stock Market ETF is up 5% over the same period.
Yet, as ETF.com pointed out, the former is actively managed, and therefore more expensive than the benchmark fund, reducing real returns for investors. The AI-powered ETF charges 0.75%, while Vanguard’s costs 0.03%. Both funds include JPMorgan and UnitedHealth Group in their top 10 holdings.
Chris Natividad, Equbot’s chief investment officer, said the Watson-powered fund can go beyond standard market data and extract insights from tweets and earnings calls, according to ETF.com.
“We focus on investment-related data, looking at how these different types of signals affect security practices over different time horizons,” Natividad said, according to ETF.com.
“The fund’s best days are still ahead of it,” he added. “And just as you’ll see ChatGPT’s responses change and evolve over time and data, so will our fund.”
Meanwhile, ChatGPT’s parent company, OpenAI, secured a $10 billion investment from Microsoft this month, and the technology continues to make waves across industries.
Online media outlet BuzzFeed announced last week that it plans to leverage technology to create content, educators are warning of bot repercussions in schools and chipmakers are ready to cash in.