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AMOM is an exchange-traded fund based on artificial intelligence.
(Photo by Fresco/Getty Images/Evening Standard)
A benchmark-beating exchange-traded fund managed by a robot anticipates AMC shares outperforming the likes of
and
Walmart
in the month of July The Qraft AI-Enhanced US Large Cap Momentum ETF, also known as the Qraft AI-Enhanced US Large Cap Momentum ETF, is a U.S. large cap momentum exchange-traded
AMOM
bought shares in on the New York Stock Exchange
AMC
—the movie theater chain and a favorite among individual investors—over some of the
S&P 500 Index
This month, the largest firms in the United States. Another meme stock, AMOM’s fondness for AMC, came as a surprise.
GameStop,
was removed from the company’s portfolio.
AMOM, which is run by artificial intelligence, rebalanced at the beginning of July, removing large technology and retail companies as it shifted its focus to pandemic transactions and lowering volatility. In the month of June,
Facebook,
Walmart,
Home Depot is a retailer that sells a variety of
Adobe,
and
Texas Instruments is a company that makes electronic instruments.
made up a combined 28 percent of the fund’s holdings, but in its most recent rebalancing, all five equities were removed, implying that the AI that controls AMOM anticipates they would face price decreases during July. Among the new equities added in July, AMC, the movie theater operator, stood out.
GameStop
In 2021, has symbolized the “meme stock” market frenzy. Also see: This Electric-Vehicle Subsidy Extension Should Help Tesla and Volkswagen Stocks. Here’s How to Do It. Earlier this year, a swarm of investors, partly organized on the social media network Reddit, helped hedge funds crush short positions in firms like GameStop and AMC. Hedge funds suffered multibillion-dollar losses, but individuals who timed the market correctly made incredible returns, ushering in a new era of internet-inspired trading. From January 20 to January 27, AMC’s stock price increased by 570 percent, from roughly $3 to nearly $20 per share. The company’s stock has risen about 1,500 percent in 2021, trading at around $33. And now, the AI at AMOM believes the stock will rise even further in July, so it has purchased enough shares to make up 1.8 percent of the fund. The addition of AMC came as the robot dropped GameStop, which had been put to AMOM in May but was removed after the stock slid more than 14% in June. “Qraft’s AI model isn’t especially built to invest in meme stocks, but rather in stocks with strong capital appreciation potential,” Geeseok Oh, managing director and head of Qraft’s Asia-Pacific operations, told Barron’s. “AI is unaffected by prejudice or bias, and it may pick up meme stocks if the trend appears to be strong,” Oh added. “Our model found AMC to be more opportunistic this month than other meme stocks like GameStop.” Plus: The New Mercedes-Benz ‘Tesla Fighter’ Is As Good As It Gets. O’Reilly Auto Parts, a retailer, was among the top five equities added to AMOM in July by portfolio weight.
Cadence Design Systems, Cadence Design Systems, Cadence Design Systems, Cadence
chain of electronic stores
Best Buy, Inc.
cancer specialist in biotechnology
Seagen,
and a software developer for businesses
HubSpot.
AMOM’s five largest holdings by portfolio weight after the fund was rebalanced were online dating firm Match.com, Match.com, Match.com, Match.com, Match.com, Match.com, Match.com, Match.com, Match
Match,
a cyber-security firm
Fortinet,
O’Reilly Auto Parts, as well as its competitors
AutoZone,
as well as retailer
Kroger.
“With Covid-19 reaching new highs, the AI executed pandemic-related trades,” Oh explained. “
Match
With more people trying out online dating, is one of the benefactors of the pandemic.
Fortinet
With more governments highlighting the importance of cybersecurity, the stock has gained traction.” Oh also mentioned that AMOM has decided to shift its portfolio away from large bets—in June, the fund’s top three equities accounted for 21% of the portfolio, but today they only account for 11%. “In light of the current market volatility, the AI appears to have altered its portfolio and concentration to mitigate potential risks,” he said. More: Tesla price hikes are being blamed on a critical parts shortage, according to Elon Musk. Will His Solution Work? AMOM has been listed in New York since May 2019, and has achieved total gains of 12 percent in 2021 and 42 percent in the previous year, outperforming its benchmark, the S&P 500 Momentum index, which has risen a similar 34 percent since July 2020. The fund is a product of Qraft, a fintech company based in Seoul, South Korea, that uses AI in all of its investing products, including three other AI-picked versions of important indexes: a large-cap index in the United States
QRFT
; a large-cap dividend index in the United States
HDIV
; and a value index for the United States
NVQ.
AMOM is an artificial intelligence-driven actively managed portfolio that tracks 50 large-cap U.S. equities and reweights its positions every month. Its stock recommendations are based on a momentum strategy, with the AI behind them capitalizing on existing market trends to influence decisions to add, delete, or reweight positions. The artificial intelligence scans the market and analyzes a wide range of patterns that indicate stock-market momentum using its prediction power. The arrival on Wall Street of AI-run funds promised a new high-tech future for investing, but it hasn’t quite lived up to the expectations. When evaluated against historical data, researchers have shown that AI investing techniques can beat the market by up to 40% on an annualized basis. In June 2020, however, Vasant Dhar, a professor at New York University’s Stern School of Business and the creator of machine-learning-based hedge fund SCT Capital Management, stated that AI-run funds will not be able to “break” the stock market’s code. Dhar urged caution, saying it was difficult for machine-learning-based funds to maintain a long-term advantage against markets that are “nonstationary and hostile.” He recommended investors thinking about investing in an AI system to ask uncomfortable questions, such as how probable the AI’s “advantage” will last in the future and what the fund’s inherent risks and range of performance outcomes are./n
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