By Elsa Ohlen
Artificial intelligence’s rise to become the hottest topic around has hardly escaped anyone’s attention. And the technology may prove to be a winner in investing.
SoftBank-backed Qraft Technologies is one company that is betting that AI can deliver in investment and portfolio management. The South Korean fintech has around $60 million in assets over three exchange-traded funds: AMOM, QRFT and LQAI, all powered by AI based on different investment strategies.
AMOM uses a momentum-factor strategy. That means it targets stocks that have outperformed in the past on the assumption they will continue to rise. Its biggest holdings are, unsurprisingly, Nvidia (9.2%), Tesla (7.7%), Broadcom (7.1%), and Meta Platforms (4.1%), all of which had impressive runs in 2024.
AMOM gained 36% in 2024, while its benchmark, the iShares Edge MSCI USA Momentum ETF, gained 32%.
QRFT, a more defensive ETF, holds some 40% of its assets in healthcare, staples and industrial stocks. It uses a more multifactor approach and holds 350 U.S. large-cap stocks, as opposed to AMOM’s 50 names.
Its largest holdings are Apple (8.7%), Meta (6.2%), Eli Lilly (3.4%), and Walmart (3.4%).
The fund did pretty well until the end of the year when its returns slipped below that of the index. It ended 2024 up 21%, compared with the S&P 500 gain of 23%.
Both funds rebalance their portfolios on the second trading day of every month. Their moves are completely up to the AI software. In early January, AMOM slightly reduced its holding in Tesla, while QRFT sold its entire 5% holding in Alphabet.
Write to Elsa Ohlen at elsa.ohlen@barrons.com