Fund Manager FINQ Lets AI Run US ETFs

Fund manager FINQ has launched two U.S. exchange-traded funds (ETFs) in which the firm’s artificial intelligence (AI) model selects, designs and manages the portfolio, Reuters reported Tuesday (Feb. 10).

Human involvement in the AIUP and AINT U.S. large-cap equity ETFs will be limited to oversight and governance, according to the report.

The funds were approved by the Securities and Exchange Commission (SEC), per the report.

“FINQ is built on a data-only system that makes investment decisions much better than humans, as it has the ability to process immense amounts of data, without the disadvantages aligned with human fear, greed, urgency to act and other disabling human attributes,” FINQ Founder and CEO Eldad Tamir told Reuters.

The company’s AI framework continuously ranks all the stocks in the S&P 500 Index daily, based on market, financial and textual data, and uses these rankings to guide portfolio holdings and weightings, according to the FINQ website.

The ETFs can be accessed by financial advisers, broker-dealers, registered investment advisers, wealth managers, institutions and other professionals, per the website.

FINQ said in a March press release that it secured an SEC Registered Investment Advisor (RIA) license that positioned the company to offer AI-powered investment solutions and operate across all 50 states.

The company said it planned to launch AI-driven ETFs, hedge funds and mutual funds, and make those funds accessible across multiple channels.

In August, FINQ said in a press release that it filed a registration with the SEC for the AIUP and AINT ETFs.

AIUP takes long positions in top-ranked stocks, while AINT balances long positions in top-ranked stocks with short positions in bottom-ranked stocks, the company said.

“Our goal is to bring advanced AI capabilities to investors in a transparent, rules-based structure,” Tamir said in the August press release. “These ETFs are designed to challenge conventional thinking by using technology to remove noise and uncover relative performance insights on a continuous basis.”

Bryan Armour, an ETF analyst with Morningstar, told Reuters in the Tuesday report that several funds that tried to apply AI to stock selection closed.

“Of course, AI may not have been as ‘intelligent’ then as it seems to be becoming,” Armour said, per the report.