WisdomTree announced Tuesday that it has restructured two of its actively managed valued funds to apply machine learning to its investment processes. The WisdomTree U.S. Dividend ex-Financials Fund (DTN) is now the WisdomTree U.S. AI Enhanced Value Fund (NYSE Arca: AIVL), while the WisdomTree International Dividend ex-Financials Fund (DOO) is now the WisdomTree International AI Enhanced Value Fund (NYSE Arca: AIVI). Both funds are now available to trade on the NYSE with expense ratios of 0.38% and 0.58%, respectively.
Going forward, the funds use the Equity Machine Intelligence (EMI) model of their sub-advisor, Voya Investment Management Co. The EMI model applies data science and artificial intelligence to fundamental value investing within a dynamic investment process.
“By leaning into AI enhanced strategies that offer dynamic value exposure, we see an opportunity to go beyond traditional ‘smart beta’ factor funds,” said Jeremy Schwartz, global chief investment officer at WisdomTree, in the news release. “We’re excited to be leveraging Voya’s EMI model in the AI Enhanced Value Funds’ restructures as a way to potentially overcome historical challenges of value investing.”
The AI Enhanced Value Family strategy focuses on companies with attractive value characteristics and aims to deliver idiosyncratic alpha, performing best in a market driven by fundamentals. The strategy seeks to avoid areas of the market that are overvalued or crowded and is well-suited for mid- and large-cap value mandates.
AIVL and AIVI have varying exposures to both deep value and relative value measures and aim to capture the value premium while avoiding drawdowns in deep/relative value measures that may be out of favor. The investment process can be broken down into five key factors: data (applying bottom-up research), features (scaling fundamental research), stock selection (using AI to remove emotion from decision making), portfolio construction & risk management, and verifying & executing portfolio.
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