ETF Watch: IBM’s Watson To Drive Fund

Proposed ETF will leverage the power of IBM’s Watson to analyze securities.
Reviewed by: Staff
Edited by: Staff

A new filing from ETF Managers Group outlines plans for an ETF that will rely on the analysis of IBM’s artificial intelligence computer system Watson. The Equbot with Watson AI Total US ETF (AIEQ) is actively managed and subadvised by Equbot, an IBM Global Entrepreneur company focused on applying artificial intelligence solutions to investing.

Watson is IBM’s supercomputer that can answer questions asked in “natural” language rather than code, and analyze vast amounts of data from various sources. It is capable of learning from its own analysis and using that knowledge to answer future questions. That capability presents some intriguing possibilities for the field of fund management.

In the case of AIEQ, Equbot uses Watson to perform objective and fundamental analysis on 10 years of historical data for U.S. equities, and then integrates that analysis with the latest news and economic data.

Likelihood To Benefit

The firm uses a proprietary model to rank companies based on the likelihood they will benefit from current economic conditions and events, selecting 30 to 70 of the top-ranked companies and assigning their weights in the portfolio.

AIEQ can invest in equities of any market-cap size. The manager also looks to maintain a similar volatility level in the portfolio to that of the broader U.S. market, the prospectus said.

The fund is slated to list on the NYSE Arca, according to the filing, which does not include an expense ratio.

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