Bloomberg: “AI-Powered ETF Getting Left Behind by an AI-Powered Stock Rally”By datatrekresearch in IN THE NEWS
Excerpt from Bloomberg quoting DataTrek co-founder Jessica Rabe:
.... "The irony at the heart of AIEQ’s underperformance is that the current AI investment craze is fueling recent gains in the broader equity indexes. Investors have piled into stocks such as chipmaker Nvidia Corp. and Microsoft Corp. and Alphabet Inc., which are bulking up their AI efforts. While that boom has helped to push the benchmarks higher — Societe Generale SA estimated in mid-May that the S&P 500 would be 2% lower this year without it — AIEQ largely has missed cashing in on the craze.
“It is ironic that an AI-powered algorithm has not capitalized on the rally in big tech stocks that’s been driven by its own disruptive technology,” said Jessica Rabe, co-founder of DataTrek Research. “AIEQ has previously tended to work best when it could catch momentum driven tech names in broad-based market rallies like during the pandemic crisis, but it’s clearly failed to do that this year"....
....AIEQ’s best performance tends to come during bull markets when the models latch onto momentum trades, according to DataTrek’s Rabe. However, that process has stumbled in 2023 even as the AI craze sweeps up some of the market’s biggest tech stocks.
“We find AIEQ is an interesting case study for asset allocators and stock pickers because its investment process differs from traditional approaches,” Rabe said. “But as with some of what we are all learning from ChatGPT, different does not always mean better"....
Full article here on Bloomberg.