The Secret Sauce for AI to Pick Market-Beating Stocks

We are now in the midst of the AI wave, and its applications in the financial markets are definitely on the rise. Investors have long dreamed of discovering a market holy grail—a strategy that could yield immense profits. With the advent of AI, many are exploring this new capability to see if it can consistently deliver returns.

However, using AI in investing isn’t a new phenomenon. Over the years, a handful of AI-powered ETFs have been launched, yet most have eclipsed the performance of tried-and-true passive index ETFs. For example, the AdvisorShares Let Bob AI Powered Momentum ETF (LETB) has closed down, while the Amplify AI Powered Equity ETF (AIEQ) has underperformed—gaining only 40% over the past five years, compared to the S&P 500 ETF (SPY), which delivered double that return. It is apparent that the current state of AI is not yet as effective as skilled stock pickers or market timers.

What I have observed so far is that a particular asset manager, Qraft, has managed to outperform the S&P 500 with its AI-powered ETFs. The QRAFT AI-Enhanced US Large Cap ETF (QRFT) and the QRAFT AI-Enhanced US Large Cap Momentum ETF (AMOM) have delivered annual returns of 15.5% and 17.8%, respectively, since January 2020—surpassing the S&P 500 ETF’s 14.5% return. Clearly, they must be doing something right.