Frankfurt-based index providers Solactive writes that Artificial Intelligence has permeated every aspect of daily lives, and now it is reshaping the landscape of investment strategies.
“AI-powered indices, harnessing the extraordinary capabilities of AI in pattern recognition and prediction, are at the forefront of this revolution,” the firm writes, announcing that it has teamed up with Qraft Technologies to introduce the Solactive Qraft AI-Generated US Equities Long Short Select Index SOLQUSLS, which combines a Quantitative-based Factor Model with an AI-based Strategy Factory model.
Relying upon macroeconomic indicators, price data, and technical signals, the SOLQUSLS index marks a significant step forward in the inclusion of AI in investment strategies. Solactive writes that this is a first-of-its-kind AI-driven long/short investment strategy. It utilises AI prediction technology to analyse equity markets and generate investment recommendations in a fully automated process monitored closely by industry experts, the firm says.
The index combines long and short exposures in securities selected from the Solactive US 1000 index. These selections are based on the projection of the price appreciation opportunities (long exposure) or price depreciation opportunities (short exposure) according to Qraft’s Model. The Solactive Qraft AI-Generated US Equities Long Short Select Index also implements foreign exchange (FX) hedging and an adjustment factor.
Qraft’s AI-based Strategy Factor model employs a transformer model with self-attention mechanism for time-series deep learning to forecast future stock performance. A wide range of meticulously curated datasets, including real-time macroeconomic factor and financial data, are used to train the AI model continuously, the firm says.
Timo Pfeiffer, Chief Markets Officer at Solactive, says: “Artificial intelligence has increasingly dominated discussions in recent years, making its integration into index strategies an inevitable next step. We are very pleased about this collaboration with Qraft and their pioneering AI forecasting models to deliver this innovative index approach to the market. Additionally, long-short strategies have gained popularity because they offer the potential for consistent returns and risk management in various market conditions. Developing an AI-powered index that tracks such a strategy can help us meet the growing demand from investors who are seeking alternative investment options, but in an innovative way.”
Francis Geeseok Oh, APAC CEO at Qraft Technologies, says: “Qraft Technologies was established with the vision of innovating the asset management industry with Artificial Intelligence. Today, we are very pleased to take an important step towards realising that vision by partnering with Solactive and launching the Solactive Qraft AI-Generated US Equities Long Short Select Index. This groundbreaking hedge fund-like long-short index is designed to leverage the extraordinary capabilities of AI in pattern recognition and prediction to reshape investment strategies, without human intervention and emotions. We believe the Index will democratise access to alpha-generative strategies that were previously only available to a select few, and that our collaboration with Solactive will allow a broader audience to experience the transformative impact of AI.”
