U.S. markets on Wednesday were put in panic mode as the 2- and 10-year U.S. Treasury yield curve briefly inverted, which is typically a recession indicator. However, some analysts feel this is an opportune time for investors to get in if they missed out during this extended bull run.
“A curve inversion is an intermediate-term buy signal,” said Tony Dwyer, analyst at Canaccord Genuity. “The initial inversion of the 2-/10-year UST yield curve works with a lag … our still-positive core fundamental thesis continues to suggest any weakness should prove limited and temporary and provide a more attractive entry point for a move toward our 2020 target of 3,350.”
Where should investors look? One area of opportunity could be within artificial intelligence (AI).
In the investment space, AI is increasingly gaining widespread attention for its ability to be a disruptive technology that spans across a variety of sectors, which makes it a viable alternative for exchange-traded funds (ETFs) opportunities. With more technologies investing in AI like Facebook who is funding brain experiments that allows a device that can read the human brain.
Facebook eventually wants to use AI technology in order to create a wearable device that can control music or interact in virtual reality via the user’s thoughts. In a report published by Nature Communications, the University of California, San Francisco conducted research using sheets of electrodes, called ECoG arrays, that were placed on the brains of volunteers.
With these technology giants looking to expand AI, funds like the AI-Powered International Equity ETF (NYSEArca: AIIQ) could stand to benefit.
Software giant Microsoft recently opened its wallet and gave OpenAI, a startup co-founded by Elon Musk, to support the goal of developing artificial intelligence (AI) technology that can outdo human brain functioning. This generous investment could certainly put AI-focused exchange-traded funds (ETFs) in focus for investors looking to capitalize on the growing space of disruptive technologies.
Under the hood, the fund runs on the EquBot Model: a proprietary algorithm with the use of IBM’s Watson. The model analyzes and compares a multitude of data points and international companies on a daily basis to find and optimize portfolio exposures.
AI continues to disrupt the investment management space, prompting many asset managers and investors to rethink the way they invest, research and develop portfolio construction methodologies. EquBot recognized this need for advancement and broke the mold by pioneering a new method combining AI with ETFs.
Whether society is ready for it or not, robotics, AI, machine learning, or any other type of disruptive technology will be the next wave of innovation. For investors who missed out on the bull market run of FAANG (Facebook, Amazon, Apple, Netflix, Google) stocks, they can look to capitalize on disruptive tech options in 2019 and beyond that.
Another ETF to consider is the ARK Innovation ETF (NYSEArca: ARKK). ARKK is an actively-managed fund that invests in domestic and foreign equity securities of companies that are relevant to the fund’s investment theme of disruptive innovation.
For more market trends, visit ETF Trends.