Kaiju ETF Advisors builds, trains, and employs robust artificial intelligence (AI) and machine learning technologies designed to improve fund management decision-making. By empowering these innovative technologies to curate and provide direct management of our ETF, we’re striving to go places no Registered Investment Advisor has gone before.
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00:00 Investors have seen a few AI-guided exchange-traded funds pop up amid the recent wave of AI hype.
00:07 These funds use AI and machine learning to select stocks, but the actual trading is still
00:11 left to humans.
00:12 But now, at a time when fears of letting AI take over are high, Kaiju ETF advisors made
00:16 the bold decision to build the first actively managed ETF that's fully managed by AI.
00:21 It picks the stocks and makes the trading decisions.
00:23 Here's how the specific AI works and why it's potentially among the most efficient
00:27 use cases for the emerging tech investors I've heard so far.
00:31 The promise and risks of AI have been making headlines more and more in the past few months
00:34 and it's often blown out of proportion or poorly understood.
00:37 The exciting new tech may deliver medical advice in a friendlier manner than some doctors,
00:41 for example, but it's often inaccurate or not up to date and doesn't factor in the
00:44 patient's relevant medical history.
00:46 As such, fears that AI will push doctors out of a job will appear largely unfounded at
00:50 the moment.
00:51 In finance, AI can serve as a high-powered data analytics tool and it's equally great
00:55 at pattern recognition.
00:56 So if you feed it intraday trading data, it can make the patterns and make predictions
01:00 based on those with impressive accuracy.
01:02 But it still has no intuition and a limited ability to understand context, apply common
01:06 sense to new situations, or completely create new ideas.
01:10 So when it comes to more nuanced aspects of financial decision making, like making longer
01:13 term forecasts, understanding the possible implications of geopolitical events, or anticipating
01:18 market shifts, it becomes a lot less reliable.
01:21 Where humans are comparatively slow to analyze data, liable to make mistakes if they're
01:25 tired or distracted, and prone to changing their trades based on gut feelings or bias,
01:29 machine learning evades all of those risks.
01:31 Once a human establishes the rules it should follow, it can execute them quickly, accurately,
01:35 and repeatedly across massive data sets.
01:38 This approach to AI turns a theoretically sound but practically hard to implement strategy
01:41 like buying the dip, the strategy behind Kaiju's inaugural buy-the-dip ETF, into a potentially
01:46 potent and repeatable strategy for generating returns.
01:49 Even when investors are good at this process, they're likely working at a snail's pace
01:52 compared to the speed at which AI can do the same thing.
01:55 In the time it takes a human to set their perimeters on their stock screen early in
01:58 the morning, AI can sift through massive volumes of data and attempt to pick out the dips to
02:02 facilitate trade execution.
02:04 That's exactly what dip is designed to do.
02:07 The team behind Kaiju's tech leveraged their expertise in mathematics, financial behavior,
02:11 data science, and computer programming to build an AI that finds stocks and makes trade
02:15 decisions according to a specific and clearly defined buy-the-dip strategy that accounts
02:19 for over 25 quantitative factors.
02:22 Rather than trying to time the market, the proprietary algorithm is trained to simply
02:25 recognize the patterns that indicate an individual stock is temporarily oversold, regardless
02:30 of larger market conditions.
02:32 This leverages its ability to parse data, recognize patterns, and make short-term predictions
02:36 without asking it to do more intuitive or creative work.
02:39 The team's depth and breadth of knowledge shaped the strategy, but it's the AI that
02:43 has the power to examine billions of data points and apply that strategy in seconds,
02:47 paving the way for swift trade execution and allowing the strategy to repeat itself over
02:51 and over again.
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