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Chatbot Craze Powers AI-Powered AIEQ ETF Higher

  • The AI Powered Equity ETF (AIEQ) has been in focus lately, with AIEQ outperforming the overall index this year.
  • Interest in AIEQ comes as investors focus on AI-related stocks and platforms.
  • However, the AIEQ ETF doesn’t diversify itself in AI stocks. Instead, it uses AI to pick stocks.
Illustration of an ETF in multiple sectors.
Source: SWKStock / Shutterstock

All the craze lately has been surrounding artificial intelligence (AI). That has been giving the AI Powered Equity ETF (NYSEARCA:AIEQ) a bit more attention as well. The exchange-traded fund is only up slightly as of this writing, but it has been doing much better this year.

After bottoming at $27.73 on Dec. 28, AIEQ popped more than 20% and rallied in four out of five weeks.

This year’s AI news is being driven by the momentum we’ve seen from ChatGPT. When ChatGPT came onto the scene, it quickly amassed millions of users. The amount of content written about chatbots, AI-driven platforms and investor interest in them seemed to increase exponentially soon after.

So far in 2023, Microsoft (NASDAQ:MSFT) has significantly increased its multi-billion dollar stake in ChatGPT parent OpenAI. Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) has also unveiled its own chatbot platform, which was followed by an embarrassing mistake.

That mistake led to a pretty big selloff in the stock price.

All of this has led to a craze in AI-related stocks — whether they are mega caps or small caps. Interestingly, though, the AIEQ ETF may not be what most investors assume.

What Is the AIEQ ETF?

The AIEQ ETF is powered by Watson AI and claims to equal a team of 1,000 fund managers and analysts. For those unaware, Watson is powered by IBM (NYSE:IBM).

This ETF’s investment objective is to seek “long-term capital appreciation and [target] a maximum risk-adjusted return versus the broader U.S. equity market.” Furthermore, the fund is “the first actively managed ETF to fully utilize artificial intelligence as a method for stock selection.”

Interestingly, though, the AIEQ ETF isn’t loaded with AI-related stocks. So, while it has done well this year, it hasn’t exploded higher like some investors may have thought. That’s because it uses AI to pick stocks instead of just investing in AI stocks.

According to MarketWatch, as of Jan. 31, AIEQ’s top five holdings are Las Vegas Sands (NYSE:LVS), RH (NYSE:RH), Constellation Energy (NASDAQ:CEG), JPMorgan (NYSE:JPM) and Roku (NASDAQ:ROKU).

So far, the results are mixed. The AIEQ ETF has roughly doubled the S&P 500’s year-to-date (YTD) return. However, both have a similar three-month performance. Finally, the index is beating the ETF over the last six months and last 12 months.

On the date of publication, Bret Kenwell did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

Article printed from InvestorPlace Media,

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