We have two thematic ETFs, the Smartshares Healthcare Innovation and Automation & Robotics ETFs offer investors access to companies globally that are at the forefront of technological innovation. These ETFs were launched in June 2019, and have performed well for investors, including through the recent market volatility as a result of COVID-19. The returns to the end of May 2020 are shown below:
Each ETF contains between 116 and 131 individual companies, so investors have broad diversification and don’t have to try to “pick winners” in each sector.
The construction of these thematic ETF portfolios makes use of leading-edge technology in the form of artificial intelligence (AI), enabling the ETF index provider to sort through thousands of company annual reports and accounts globally to identify those companies which qualify to be included. Using computer algorithms, this analysis is done in a fraction of the time and at a fraction of the cost of manual analysis.
We see great opportunities ahead using technology to ‘indicise’ the types of strategies used by active fund managers.
For example, AI is already used to screen companies based on factors such as ESG (Environmental, Social and Governance), low volatility and quality. Again, historically the work of identifying these types of companies required teams of analysts, but is now possible using AI and algorithms at a fraction of the cost. This means investors no longer have to pay high fees to get great returns.
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