LG, a titan in the global electronics sphere hailing from South Korea, is renowned for its astounding Black Friday bargains. Yet, the conglomerate’s scope extends far beyond what is commonly perceived, with its foray into the realm of artificial intelligence (AI) bolstering its myriad subsidiaries. Recently, LG has channeled its AI prowess into energizing a novel Exchange-Traded Fund (ETF).
Young Choi, helming business development and strategic alliances at LG AI Research, elucidates, “Our expansive language model is adept at projecting the ebb and flow of product demand and the acquisition of essential materials. The fluctuating financial markets offer a fertile ground for our model to assimilate and adapt to diverse data streams.”
The Advent of an AI-Powered ETF
In a collaborative venture with QRAFT Technologies, the LG-QRAFT AI-Powered U.S. Large Cap Core ETF (LQAI) marked its commencement last Wednesday on the New York Stock Exchange, a milestone celebrated by VettaFi.
Prior to this, QRAFT had unveiled four AI-centric, actively managed ETFs, including the QRAFT AI Enhanced US Large Cap ETF (QRFT) and the more recent QRAFT AI-Pilot U.S. Large Cap Dynamic Beta & Income ETF (AIDB). AIDB employs AI to astutely navigate between large-cap equities and cash-like fixed income instruments, leveraging over 70 macro and market data arrays. As of early November, AIDB had invested 99% in the iShares Core S&P 500 ETF (IVV) and a minor 1% in the iShares Short Treasury Bond ETF (SHV), with a shift to a 97% equity weighting at September’s end in 2023.
Distinguishing QRFT and LQAI’s AI-Based Stock Selection
Francis Oh, QRAFT’s AI ETF maestro and Asia-Pacific CEO, states that LQAI harbors a more concentrated portfolio compared to QRFT. LQAI’s selection of approximately 100 stocks is based on relative vigor as deciphered by the joint AI mechanisms of LG and QRAFT. The ETF’s prime holdings encompass Intel, Netflix, and UnitedHealth Group.
Conversely, QRFT maintains 350 positions by dynamically alternating among aspects like momentum, quality, and value, with leading stakes in Apple, Costco, and Pool Corporation.
Oh, representing QRAFT, graced the VettaFi Artificial Intelligence Symposium in August 2023. QRAFT’s ETF assets total around $30 million, and their AI models find extensive use among institutional investors. Predictions are rife about a significant escalation in their ETF asset base. In August, numerous advisors relayed to VettaFi their burgeoning confidence in leveraging AI for investment decision-making.
Contrasting AI-Driven ETFs and AI-Thematic Investment Funds
While QRAFT’s ETFs utilize AI for active security selection across diverse sectors, these funds are distinct from thematic ETFs aiming to capitalize on AI’s expanding influence beyond finance. This distinction was further highlighted in October when President Biden issued an Executive Order outlining a comprehensive strategy for AI’s safe and equitable progression, emphasizing workforce training and global cooperation.
