Qraft Technologies targets US high-dividend stocks in latest AI-driven active ETF
South Korean artificial intelligence (AI) firm Qraft Technologies has unveiled its latest ETF in the US with the launch of the Qraft AI Enhanced US High Dividend ETF (HDIV US) on NYSE Arca.
Similar to the firm’s first two ETFs, which debuted in May 2019, the fund has been brought to market in partnership with white-label ETF platform Exchange Traded Concepts.
The ETF is actively managed and invests in a portfolio of dividend-paying US-listed securities while using proprietary AI technology to select companies whose stock prices are expected to outperform over the short-term.
To be eligible for selection, a company must first have a minimum market capitalization of $4 billion and be listed on one of the main US stock exchanges.
The selection pool is reduced to 150 constituents by using a proprietary screening approach that favours firms with exposure to dividend and quality factors.
The methodology then harnesses Qraft’s AI Quantitative Investment System known as AQUA which uses deep learning technologies to provide a probability distribution for the expected three-month return of each stock. The 100 stocks with the highest average three-month expected return are selected for inclusion.
Constituents are weighted by market capitalization subject to an individual cap of 10% and a cap of 40% on the total weight of all stocks above 5%.
The fund comes with an expense ratio of 0.75%.
Hyung-Sik Kim, CEO and Co-Founder of Qraft Technologies, commented, “We have been working together with Exchange Traded Concepts in efforts to improve the performance of traditional quantitative investment strategies by applying AI technologies. As our system is ready to compete in the heart of the global financial market, we feel happy but also feel a sense of responsibility for proving AI’s capabilities in the world of investing. In the future, we expect AI-enhanced products have the potential to become substitutes for broad market indices if we prove it with our technologies.”
Garrett Stevens, CEO of Exchange Traded Concepts, added, “We are thrilled to be working with the Qraft Technologies team to bring this timely and innovative fund to market. These funds are actively managed by the AI system AQUA which was developed by Qraft Technologies. Great colleagues and great ideas are the true drivers of ETF success. We’re very pleased to add HDIV to our growing list of partners and innovative ETF solutions.”
Qraft’s first two ETFs are also listed on NYSE Arca and come with expense ratios of 0.75%. The Qraft AI Enhanced US Large-Cap ETF (QRFT US) uses insights from AQUA to sharpen exposure to five factor risk premia within the US large-cap equity market: Quality, size, valuation, momentum, and low risk.
The QRAFT AI Enhanced US Large Cap Momentum ETF (AMOM US) also focuses on the US large-cap universe. The fund, which typically holds around 50 constituents, uses AQUA to determine how a stock’s price momentum might change over a certain period.