ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Artificial Intelligence
      • Beyond Basic Beta
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Investing
      • ETF Education
      • ETF Strategist
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Institutional Income Strategies
      • Leveraged & Inverse
      • Managed Futures
      • Market Insights
      • Modern Alpha
      • Multifactor
      • Responsible Investing
      • Retirement Income
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Commodities
        • Gold/Silver/Critical Minerals
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Technology ETFs
  2. Top ETFs That Use AI to Pick Holdings
Technology ETFs
Share

Top ETFs That Use AI to Pick Holdings

Sam BourgiDec 06, 2016
2016-12-06

Information technology has changed the very nature of the financial markets, sparking a FinTech revolution that cuts across traditional banking and investing to deliver new ways of accessing the world of finance.

Artificial Intelligence (AI) powered by big data analytics and machine learning has fast become the go-to method for buying and selling assets on the open market. The year 2016 has seen the rise of the artificially intelligent hedge fund, a trend that will only intensify as machine learning and big data expand in size and capability.

The buzz surrounding AI has existed for several years, but has only recently taken off as an investment vehicle. Established asset managers and hedge funds are pouring money into emerging technologies and new data management techniques to stay ahead of the yield curve in an increasingly volatile international market.

In the market of Exchange Traded Funds (ETFs), AI uptake has been slow, as many market capitalization and price-weighted indices still rely on traditional methods. The ETF market has expanded rapidly over the past decade and will continue to do so for the foreseeable future. As indexing methodologies grow and evolve, many more asset managers will be keen to explore AI capabilities for boosting portfolio growth and diversifying across markets.

BUZZ Indexes: Early AI Adopter

To say that BUZZ Indexes is an early adopter of AI capabilities would be an understatement. BUZZ uses social media’s big data analytics to identify the best investment opportunities in the market. According to the BUZZ Indexes website, online investment discussions have grown 500% over the past three years. Within the context of big data, that’s 500% more ways to convert raw information into investing opportunities.

The BUZZ Social Media Insights ETF (BUZ C) tracks which investments are trending on social media through the lens of artificial intelligence and machine learning. Index creator Jamie Wise told ETF Database earlier this year that the BUZZ ETF differentiates itself from the pack by going beyond simplistic keyword analysis to capture the way people are thinking about brands from both investment and business perspectives.

Jamie Wise adds, “BUZ is the only investible solution that provides investors with exposure to a portfolio of securities of large-cap U.S. equities which exhibit the highest degree of positive investor sentiment. Concentrated positive sentiment positioning based on insights derived from social media’s big data, that’s what BUZ is all about.”

The ETF’s methodology utilizes big data analytics to sift through social media, uncovering the average total number of online mentions for U.S. listed equities over the previous four quarters. The top 125 to 150 securities with a market capitalization of at least US$5 billion and average daily trading volume of at least $1 million comprise the eligible investment universe. BUZ’s proprietary methodology then assigns each of the 125 to 150 securities a unique Insight Score. Securities with the top 75 Insight Scores are included in the index. Securities are weighted by Insight Score and the max weighting is 3% per holding.

Currently, there are no other ETFs that utilize AI methodologies to pick holdings other than BUZ. For more details on how the BUZZ Index is using social media to outperform the S&P 500, read “BUZZ Index: Using Social Media Sentiment to Outperform the S&P 500”.


Content continues below advertisement

Magha CGI 30 Index: Another Case of AI in Action

The Magha CGI 30 Index, which is designed to tap into large-cap U.S. equities with an average market cap of about $150 billion, also utilizes AI for making investment decisions. While the index has outperformed the S&P 500 over the last two years, it remains untracked by the ETF market. According to Shaunak Khire, Partner at Magha Holdings, that will soon change.

“I think AI will ultimately make financial products more accessible,” Khire told ETF Database in an exclusive interview in April 2016.

“The great thing about the technology behind AI, neural networks, and supervised or reinforcement learning approaches is that you now have an entity whose goal is sort of predefined. This goal is to allocate capital as efficiently as possible while maximizing returns.” Khire adds. “It can do this way more quickly than is remotely feasible for a team of humans. Therefore, I believe over the next three to five years, most asset managers will start having people to oversee an AI’s investment strategy and making sure there are no ‘fat finger’ trades for an algorithm as opposed to actively investing in the markets.”

Already today, several ETFs that track underlying AI technologies exist, such as the iShares Exponential Technologies ETF (XT B), the Global X Robotics & Artificial Intelligence Thematic ETF (BOTZ B) and the Robo-Stox Global Robotics and Automation Index ETF (ROBO B-). Artificial intelligence technology is improving on a daily basis. Here we have an article that describes the best ETFs to capitalize on the rise of artificial intelligence. These ETFs track companies that invest heavily in AI technology.

To find more unique technology and related ETFs, use our ETF Screener. Filter ETFs using criteria such as asset class, sector, region, liquidity and expenses, to name a few.

For more detail on the Magha CGI 30 Index, read our Q&A with Shaunak Khire, Partner at Magha Holdings, which is a FinTech company that utilizes cutting edge technology with a focus in finance.

For a full list of Artificial Intelligence ETFs, click here.

The Bottom Line

Emerging technologies such as AI, big data analytics and machine learning are creating new possibilities for ETF investors. This market is expected to expand manifold as fund managers continue to explore data-intensive strategies. For information on new ETFs, including ETFs that utilize AI for picking their holdings, visit our ETF Launch Center to stay up to speed on the latest developments in the market.

» Popular Pages

  • Tickers
  • Articles

Oct 03

Once in a Decade Opportunity to Diversify Away From the “Magnificent 7”

Oct 03

Top Performing Leveraged/Inverse ETFs: 10/01/2023

Oct 03

2023's Overactive Active ETF Flows Are Largely a Mirage

Oct 03

Domestic Small-Caps Getting Too Interesting to Ignore

Oct 03

Zacks Actively Seeks Small and Mid Cap Stocks With SMIZ ETF

Oct 03

ETF 360: Innovator's Tim Urbanowicz

Oct 03

Good Reasons to Consider China With ESG Overlay

Oct 03

Dollar Strength Will Continue to Weigh Down Gold Prices

Oct 03

The Dual Purpose of Silver Is Buoying Prices

Oct 03

With AI, Play the Disruptors, Not the Disrupted

QQQ

Invesco QQQ Trust Series I

SPY

SPDR S&P 500 ETF Trust

VOO

Vanguard S&P 500 ETF

TSLY

YieldMax TSLA Option Income...

SCHD

Schwab US Dividend Equity ETF...

VGT

Vanguard Information...

XLK

Technology Select Sector SPDR...

TLT

iShares 20+ Year Treasury...

VNQ

Vanguard Real Estate ETF

SMH

VanEck Semiconductor ETF

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X