The AI-Powered Equity ETF, one of the oldest exchange-traded funds powered by artificial intelligence, with the ticker AIEQ, is performing worse than the S&P 500 and the Nasdaq Composite since the beginning of the year, even as the market rally is fueled by AI-based stocks including NVIDIA Corporation, Microsoft Corp, and Alphabet Inc. According to data from Benzinga Pro, while the AI Powered Equity ETF has gained 2.4% so far in 2023, the S&P 500 has gained over 8%, and Nasdaq has risen over 20% in the same period.
Bloomberg reported this story earlier today.
The Bloomberg report notes that investors have been keen on tech stocks such as NVIDIA, Microsoft, and Alphabet, which are investing heavily in their AI efforts. While this tech-fueled stock rally has helped the indices register decent gains, the returns of the AI-powered ETF AIEQ appear to be relatively lower, which is ironic.
Jessica Rabe, co-founder of DataTrek Research, told Bloomberg that it is ironic that an AI-powered algorithm has not capitalized on the rally in big tech stocks that’s been driven by its own disruptive technology.
Previously, AIEQ worked best when it could catch momentum-driven tech names in broad-based market rallies like during the pandemic crisis, but it’s clearly failed to do that this year, said Rabe.
AIEQ mainly consists of approximately 150 stocks inclined towards software and internet shares, with Palantir Technologies Inc as its top holding. While Alphabet is among the ETF’s top 10 holdings, it does not hold popular AI stocks such as Nvidia and Microsoft.
