1. Will fund managers be replaced by machines? Canada launches first AI-run ETF

Will fund managers be replaced by machines? Canada launches first AI-run ETF

Even as we come to terms with robots taking away blue-collar jobs, Canada’s first artificial intelligence (AI) exchange-traded fund shows that even white collar jobs may no longer be a safe bet.

By: | Published: November 4, 2017 4:00 PM
Canada launched its first AI-run ETF last week. (Image: Reuters)

Even as we come to terms with robots taking away blue-collar jobs, Canada’s  first artificial intelligence (AI) exchange-traded fund shows that even white collar jobs may no longer be a safe bet. According to a recent report in The Globe and Mail, Horizons ETFs Management (Canada) Inc. is set to launch the Horizons Active A.I. Global Equity ETF – an actively managed investment strategy entirely run by an AI system that extracts patterns from analyzing data. Interestingly, the ETF, subadvised by Mirae Asset Global Investments, will provide investors with exposure to major global equity indexes using a basket of primarily North American-listed ETFs; where the index exposure is determined by AI stock-picking. Just last month, the AI Powered Equity ETF which uses IBM’s Watson technology became the first robot-run ETF in the world.  The AI powered Equity ETF debuted on the US stock exchange, and invests in US stocks only, while Horizons is looking to invest in global equities.

In an interview to Bloomberg,  Steve Hawkins, co-chief executive officer of Horizons ETFs Management Canada, said before the Horizons Active A.I. Global Equity ETF began trading on the Toronto Stock Exchange on Wednesday, “I’m going to be buying some but I’m buying it as a nervous investor myself, we don’t know what the computer will do.”

Steve Hawkins pointed out to Bloomberg that the artificial intelligence behind the ETF, developed by Korea-based Qraft Technologies Inc., was rigorously back-tested over 10 years of market moves to make sure it learned how to interpret data and make smart investments. However, unlike human portfolio managers, it will never be able to explain why it made a particular decision, says the report.

Pointing out the strengths of the AI-run fund, Steve Hawkins told Bloomberg, “AI can do the work of a team of global strategists, can look at millions of data points very quickly, where a team of strategists would have to work 24/7, 365 days a year. It doesn’t bring in investor bias or emotion with respect to any of its decisions, and we hope to see output that will be able to consistently outperform human decision-making.”

Meanwhile, a recent World Bank report found that automation threatens 69 per cent of the jobs in India. “As we continue to encourage more investment in infrastructure to promote growth, we also have to think about the kinds of infrastructure that countries will need in the economy of the future. We all know that technology has and will continue to fundamentally reshape the world,” World Bank president Jim Kim said recently.

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