Get Disruptive in 2019 With These 10 Exchange-Traded Funds (ETFs)

Whether society wants it or not, robotics, artificial intelligence (AI), machine learning, or any other type of disruptive technology is the next wave of innovation. For investors who missed out on the serendipitous run of FAANG (Facebook, Amazon, Apple, Netflix, Google) stocks, they can look to capitalize on disruptive tech options in 2019.

Disruptive technology is not relegated to certain sectors as it will permeate into all industries in some form or fashion. For example, augmented reality is technology comprised of digital images superimposed over the real world, and its use is primed to drive industry growth–industries like real estate and manufacturing are already putting the technology to use in a variety of ways.

“The AR/VR space has extended far beyond its roots in gaming to applications in healthcare, retail, manufacturing, entertainment and more,” said Matthew Bielski, founder and CEO of Defiance ETFs.

In early 2018, technology mogul Elon Musk, founder of SpaceX and co-founder of Tesla, sat down with the Artificial Intelligence Channel to discuss his thoughts on AI as it relates to his neurotechnology company Neuralink. Musk wryly responded to the notion that a lot of experts in the AI space do not share his views on the subject.

“Fools,” retorted Musk. “They (smart people) don’t like the idea that a machine could be way smarter than them so they discount the idea, which is fundamentally flawed. It’s the wishful thinking situation.”

In fact, Musk told the World Government Summit in a February meeting last year that humans need to avoid becoming redundant as technologies like AI become a common reality. If the trend towards disruptive technology is indeed the proverbial wave of the future, then investors should also take advantage through their exchange-traded fund (ETF) investments.

ETFs to consider:

Industry Experts Discuss AI in Finance

AI, in particular, is gaining widespread attention for its ability to disrupt a variety of sectors. In the financial space, AI can be used to perform risk-reward analysis, fraud detection and advisory services, but how does the technology specifically serve ETFs?

ETF Trends Publisher Tom Lydon spoke with Yasmin Dahya and Joe Staines, of J.P. Morgan Asset Management on how this transformative technology is being utilized by ETFs.

Click to open the podcast player in a new window:

Evolution Versus Revolution of AI

Staines cites two ways that AI can materially impact ETFs–the first being the innovations that currently appear in today’s technology, such as those implemented by tech giants like Google and Amazon, will make their way into ETFs. Second, the implementation of AI can be actively incorporated into daily activities with respect to portfolio management.

“Everything that technology has done as a whole to investing as a sector over the last few decades, we’re going to see the same sort of innovative impact from machine learning and AI,” said Staines.

Of course, when such a transformative technology like AI is introduced into a financial industry that can be reticent to change and stuck in tried-and-true ways, it can present a challenge. In fact, as Dahya points out, the first AI conference was in 1956 so the technology has been around for some time–with its slow adoption, Dahya cites that incorporating AI will be more an evolution as opposed to a revolution.

“What I think is happening right now if more of a focus and a dialogue,” said Dahya. “What that sort of means though is you have to separate the noise from the truth a little bit.”

AI Uses by Investors and Portfolio Managers

With the availability of AI and its capabilities now being filtered down to the masses, investors can use these tools to incorporate in their own research in order to filter out opportunities. Likewise, portfolio managers and advisors now have access to AI technology that can be built into the financial products, so that investment decisions are made easier by parsing out key points from complex data.

“You’re seeing more and more products right now using AI-driven processes,” said Staines. “Incorporating those can give you an aspect that extends what systematic investing is capable of.”

Of course, as the old adage goes–time is money–that can certainly prove to be beneficial with the incorporation of AI into financial products. By expediting the investment decision-making process even more, portfolio managers and investors can reap the benefits of the efficiency.

“Being able to do the thing you need to do, but faster, better and more precise,” said Dahya.

One area seeing innovation is machine learning. This innovation is able to learn the investment process of humans, harness their nuances and even adjust them over time as processes change–this helps to also remove any investment biases that may be preventing an investor from seeing through the noise.

“By employing a system such as AI, we can attempt to mitigate those types of biases,” said Staines.

“This idea that systematizing the investment process and taking human emotion out of the day-to-day decision making is supplemented by having access to data,” Dayha added.

To listen to the full podcast, click here.

For more market trends, visit ETF Trends.