AI-Driven Multifactor ETF Debuts

Reality Shares’ newest fund incorporates a wide range of factors.
Reviewed by: Staff
Edited by: Staff

Today, Reality Shares added a new multifactor fund that relies on artificial intelligence to its lineup. The Reality Shares Fundstrat DQM Long ETF (DQML) targets the large-cap segment of the U.S. stock market.

DQML comes with an expense ratio of 0.69% and lists on the NYSE Arca.

Kian Salehizadeh, a senior analyst at Reality Shares, described the fund as a next-generation multifactor ETF. “We believe this is the future of multifactor investing,” he said.


The fund’s index evaluates the top 500 U.S. stocks based on market capitalization via more than 40 factors falling into eight different factor groups and assigns the stocks scores. Different factors carry more or less weight depending on what sector a stock falls into. Essentially, the fund materials indicate value may have a higher weight for a utility stock, while momentum could have a higher weight for an information technology stock.

From there, the methodology selects the top 100 companies based on their factor scores and equally weights them. To further enhance the methodology, the index implements artificial intelligence to make improvements to how it implements factor analysis through machine learning.

Salehizadeh says that the machine learning is a key differentiator for the fund.

“Based on the performance that they’ve tested so far, it’s done much better than existing multifactor strategies,” he noted, referring to DQML’s underlying methodology and pointing out that existing multifactor strategies have not really outperformed the overall market as hoped.

DQML’s underlying index was developed by research boutique Fundstrat.

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