If we are to describe AI in a single line and in the simplest terms, then AI is simply pattern recognition. Over the past few years, AI has moved through multiple stages of public understanding, usability, and media hype. There is talk that it will save the world, and then a section predicts that it will destroy the world. It is a big blow for the working population as AI will take all the jobs in the future.
Every technology has pros and cons to it. Today, we focus on the pros and leave the cons for you to explore. We have used AI to create Jarvis Invest, and we know how it has changed the lives of thousands of investors. Hence, we are in a position to talk about the pros.
What are Exchange Traded Funds?
Exchange Traded Fund (ETF) is a stock basket that is a mirror image of an Index – it could be Sensex, NIFTY50, or some other sectoral index. ETFs are similar to mutual funds in many ways – the underlying assets are stocks.
However, unlike mutual funds, where the stocks to be bought and sold are decided by a fund manager, stocks in ETFs are the same as the corresponding index. These are listed on the stock exchanges and can be traded like any other stock. ETFs aim to track the relevant index and replicate its returns.
AI Exchange Traded Fund
We have talked about AI a bit and also explained ETFs. You must be wondering how the two connect there seems to be no connection.
Well, that is the beauty of Artificial Intelligence – it finds application in areas one does not expect it to be of much help.
The world’s first AI-powered ETF was launched in 2017 by an American company. The idea was simple – the company ranked thousands of stocks based on the probability of how each company would perform in the current economic conditions, world events, and trends. It picked the stocks for inclusion in portfolios with the highest potential for price appreciation. Their AI ETF has been doing well since then. We have a similar approach at Jarvis Invest.
Important – You will find AI ETFs used in a different sense in some places. It could also mean an ETF where the underlying companies are those that work around AI, robotics, and other similar areas.
Please do not get confused between the two – they are poles apart. That is just a different ETF category.
How does an AI system pick stocks?
Picking stocks for ETFs or your personalized portfolio, AI does it all very efficiently. But how does it all happen? Many investors assume it is a black box. It is not. Yes, the machine learning and AI algorithms that drive the investment process are complex and hard for an average investor to understand, but it is not a black box.
We at Jarvis use an end-to-end process to pick stocks – by combining technical and fundamental analysis and everything in between. Our AI-driven platform uses 12 million data pointers before we select a company for investment for any of our clients.
What is the purpose of all that we do? We aim to use AI to augment or replace the portfolio manager to process more market data and generate more objective investment decisions given a set of investment criteria. The end objective is also to ensure investors are not paying hefty charges for
stock selection.
How does AI reach a final decision of picking a particular stock?
Many investors think that AI does everything on its own, and may go wrong. One important thing you must understand is – Yes, AI is picking stocks for investors with no human intervention. But how
is it doing it? It is doing it based on the training and data that is fed to the system by humans.
The data sets that are acted on by AI are determined by humans, and they broadly reflect pre-determined possible investment goals. For example, we have different investor categories on Jarvis -conservation, moderate, moderately aggressive, aggressive, and very aggressive. If today, you ask AI
to pick stocks for two categories, – it will pick different stocks. It is not doing this on its own (technically) – it has been trained to do so. For example, for conservative investors, Jarvis is trained to pick low-volatility stocks.
AI-driven ETFs – Do you want one?
Currently, there are no AI-based ETFs in India. Would you like to invest in AI-driven ETFs? Well, it is something worth considering.
For now, you have the option to do AI-based investing. So far, you may not have invested in the equity market because you were worried that you did not have the knowledge. You can change that now – use an AI-driven platform and start your equity investment.
You trust technology for so many things – even for your life. You drive a car because you trust technology. It is time you started trusting AI technology for your investments. We have the data to show the returns it has delivered to investors over the years. Download the app now and get started.