Qraft Technologies launched the QRAFT AI-Pilot U.S. Large Cap Dynamic Beta and Income ETF (NYSE Arca: AIDB), an AI-powered risk-managed fund. Actively managed by artificial intelligence, AIDB seeks long-term capital appreciation by adjusting its equity exposure to reduce the impact of drawdowns.
AIDB will leverage Qraft’s AI-powered risk model to account for over 70 macro and market data sets. The model assesses factors like momentum, volatility, and correlation.
The fund oscillates exposure between broad-based U.S. large-cap equities and cash/cash equivalents based on the AI’s perceived market risk on a weekly basis. By doing this, the fund seeks to provide downside mitigation against extreme losses and lower volatility of investors’ portfolios.
“We believe the application of AI in actively managed funds transcends the limitations of the human mind, allowing for potentially better risk management and investment decision making,” said Marcus Kim, founder and CEO of Qraft. “This is an especially relevant potential benefit for investors in times of market distress when emotions and biases are heightened.”
See more: “Artificial Intelligence ETFs, or ETFs Powered by Artificial Intelligence?”
Kim added: “We’ve introduced AIDB to extend these benefits to investors seeking dynamic equity exposure amid global market volatility by anchoring this fund’s strategy to our time-tested AI risk prediction model.”
Francis Geeseok Oh, APAC CEO of Qraft Technologies, said: “AI’s speed and prediction capabilities will help investors uncover greater opportunities.”
Reducing Risk Through AI
Market volatility has spurred investors into seeking risk-managed strategies. But risk-managed strategies can be rules-based. They can also often lag behind market moves or cap potential gains.
AIDB, meanwhile, seeks to account for market risk based purely on the factors that drive markets. It also looks to reduce the impact of drawdowns over the long term.
“Given the expected market volatility this summer, advisors are likely looking to reduce risk,” said Todd Rosenbluth, head of research at VettaFi. “This new ETF incorporates artificial intelligence to shift from risk-on equities to risk-off cash, unlike peer products.”
Qraft Technologies is an invest-tech company developing artificial intelligence investing solutions backed by SoftBank.
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