An artificial intelligence-driven exchange-trading fund correctly predicted Tesla’s price movement and recently shared its most recent portfolio additions and subtractions with MarketWatch.
The fund is the Qraft AI-Enhanced US Large Cap Momentum ETF, traded as AMOM
on the New York Stock Exchange since May 2019. The ETF has delivered a total return of 9% so far in 2021 and 79% last year – significantly ahead of its benchmark, S&P 500 Momentum ETF
is back 45% compared to April 2020.
AMOM is an actively managed portfolio thanks to artificial intelligence that tracks 50 major US stocks and reassesses its holdings each month. It is based on a momentum strategy, with the AI behind its stock opting to take advantage of the movements of current market trends to inform decisions to add, remove or re-weight holdings. Artificial intelligence scans the market and uses its predictive power to analyze a variety of patterns representing stock market dynamics.
The fund is the product of Qraft, a fintech group based in Seoul, South Korea that leverages AI on its investment products, including three other AI versions of key metrics: large-cap index of USA
US large-cap dividend index
and a US value index
One of AMOM’s outstanding achievements was to accurately predict the price action of electric car maker Tesla
share. The fund sold all of its shares at Tesla in late August, before the stock fell 14% in September and another 10% in October. AMOM bought the discount, reinvesting it in Tesla. November and stock refills until the end of January, at which point Tesla accounted for 6.7% of its portfolio.
Before the start of February, AMOM had sold all of its shares Tesla held because it was near an all-time high. Shares of EV company have fallen more than 12% since the beginning of February, when AI decided to sell. AMOM has not yet acquired Tesla.
The entry of AI-run funds into Wall Street promises a new high-tech future for investing, though it still hasn’t quite matched the hype. Theoretically, researchers have shown that Investing strategies in AI can beat the market up to 40% on an annual basis, when checked against historical data.
But Vasant Dhar, professor at New York University’s Stern School of Business and founder of a hedge fund based on machine learning, debate on MarketWatch in June 2020 that AI-run funds will not “break” the stock market.
Dhar says it is difficult for funds backed by machine learning to maintain a sustained edge in markets that are inherently “highly aggressive.” He advises investors considering investing in an AI system to ask tough questions, including how the “advantage” of AI will exist in the future, and inherent uncertainties. and the scope of the fund’s operating results.
AMOM’s top stocks for April
AMOM’s AI pushed recommendations to reorient the fund’s portfolio by the end of March, including redefining the holding weight as well as adding new stocks and launching other stocks.
is the largest additional stock, with a portfolio weight of 2.7%. So far, the retail giant’s shares have risen 3% this month, with shares 15% higher in 2021. AI may have chosen the stock as part of the broader rotation into stocks. value, matching the addition of another retail giant Walmart
was the fund’s second largest holdings in March, Qraft said. Walmart shares have risen more than 7% since it was added to AMOM last month.
is another addition to the fund, with its portfolio weight being just 2.69% lower than Target. Shares in the cloud software company have risen nearly 10% so far this month, in a rebound that has sent shares up 4% this year.
Outstanding on Services today in portfolio weight is Autodesk
accounting for 2.16% of AMOM’s portfolio. Shares in software and design tools makers, including AutoCAD, are 6% higher since the beginning of the month and lower than last year. Monster Beverage
is another option for April, included in AMOM with a portfolio proportion of just under 2%. Shares of the energy drink company rose 5% in April and nearly 6% in 2021.
The final source of the top 5 added to AMOM for April was another product of great value: O’Reilly Auto Parts
with allocation of 1.8%. Shares of component retailers are trading just 1% higher since the beginning of the month, up 13% from the start of the year – so there could be more gains for the rest of the month if AI is correct. .
5 stocks AI does not like
But AMOM also scrapped its stock at the beginning of April, including the removal of two big blue-chip names that have a large proportion of their portfolio. Graphics chip manufacturer Nvidia
and home improvement retailer Home Depot
previously accounted for more than 5% of AMOM, was phased out at the beginning of the month.
The next three largest stocks by portfolio weight to be excluded from the fund are semiconductor system provider KLA Corporation
Zebra Technologies barcode and computer tracking team
and backup generator maker Generac Holdings
All five of those shares have actually rallied in April so far, with Nvidia’s 17% higher since the end of March. But if the AMOM is correct, there could be a correction coming.