Key facts
- Fewer than six ETFs rely solely on AI for stock selection, managing about $30 million of the $17 trillion ETF industry.
- 91% of asset managers surveyed by Mercer plan to increase their use of AI-based portfolio management tools this year.
- Ai Funds' High Conviction US Equity AI-Managed ETF is up 2.7% since its August 21 launch, beating the S&P 500's 1.1% gain.
- FinQ's dollar-neutral US Large-Cap AI-managed ETF has gained 25.35% since its February inception, outperforming the S&P 500's 11.0% gain.
- The Pictet AI Enhanced US Equity ETF has gained 14.8% since its February debut, compared to 11.4% for the S&P 500.
A growing number of fund managers are launching exchange traded funds that use artificial intelligence to pick stocks, aiming to outperform human managers and passive index funds. While these AI-run funds currently represent a small fraction of the market, with collective assets of about $30 million, their managers believe strong performance will attract more investment. AI's ability to process vast amounts of data rapidly and eliminate human emotional biases is seen as a key advantage. Some funds have shown significant gains since their launch, outperforming the S&P 500 index. However, concerns remain among some financial advisers and analysts regarding the short track records and fees associated with these AI-powered funds, as well as their ability to manage risk during market downturns.