Market conditions bring us news of old-school AI, IBM Watson, up against the new kid on the block, ChatGPT, which, when asked to create a market-beating ETF failed, according to Bloomberg.
IBM’s Watson sits behind USD125 million EquBot’s AIEQ, founded in 2017, from the ETF Managers Group, and currently enjoying returns twice that of the S&P 500. The result has been asset and performance growth of USD30 million this year.
Chris Natividad, EquBot co-founder and CIO, explains that the firm uses IBM Watson to equal a team of 1,000 research analysts, traders and quants working around the clock, and it was the first ETF to fully utilise AI to pick a basket of stocks.
“We are excited to see that growth on the back of folks reviewing the ETF and how it’s doing,” Natividad says. “That came about because of news of Chat GPT and our perspective is that we are scratching the surface and this renewed attention is very helpful.”
Natividad says that the firm welcomes more competition as they feel they are still very much in the educational phase. “Most of the large banks are going through the exercise of should they build or buy an AI investment piece. Our ETF was a proof of concept and something we are proud of. AIEQ allowed us to develop notable relationships with ETFMG and some of the largest financial institutions in the world.”
AIEQ’s portfolio constantly updates which Natividad compares with the repeated updates on an iPhone. “Our system perpetually updates and it has been tremendously fun to share the different forms of investment data we receive and share it with investors,” he says.
During the pandemic years, the subjects under discussion were pharmaceutical data, based on clinical trials in Europe and the US, whereas now Elon Musk’s tweets about Twitter or views on Tesla, all throw up non-traditional unstructured data that are going to be important, Natividad says.
“It’s these non-traditional sources of data are going to be more important – it’s structured data as well but the part that’s growing is unstructured data.”
But he points out that 90 per cent of the data in the world was only created in the last two years. “The variety and velocity and volume of data is exploding,” he says.
Natividad draws an analogy between video conferencing and the growth in AI. “Compare a current video conference call with how it was a few years ago in terms of speed and quality,” he says.
“AI has been around for decades since the Turing tests in 1950, or Gary Kasparov and Deep Blue in 1996, or IBM Watson on Jeopardy 2011,” Natividad says, noting that the IBM Watson has built a great deal of credibility and ‘is tremendously important for investors’.
