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 BTD Capital Fund DIP+ Free Alerts, the actively managed ETF, is powered by an AI that's been
00:07 trained to apply the classic "buy the dip" strategy to manage the fund's portfolio.
00:11 While other AI-driven ETFs have also deployed emerging tech in stock selection, DIP is the
00:16 first fund on the market to use AI for both picking the stocks and directing the trades.
00:20 Kaiju ETF Advisors, the company behind the AI-powered active ETF, says it chose a "buy
00:25 the dip" strategy for its first ETF as a kind of proof of concept of its proprietary
00:30 AI.
00:31 The relatively conservative trading strategy tasks the algorithm with finding large-cap
00:34 stocks that are temporarily trading below their mean and then selling them a few days
00:38 later when they bounce back up.
00:39 Here's how DIP works and what separates it from the other AI-driven ETFs.
00:44 The AI behind DIP has been trained to find stocks and plan trades, using over 25 factors
00:48 that the team of financial behaviorists, mathematicians, and data scientists who built it have identified
00:53 as predictors that a price is both artificially low and likely to move high in the next few
00:57 days.
00:58 The fund will hold 25 to 100 positions, but it's not intended to hold any of them for
01:02 long periods because it's not designed to time the market.
01:05 Instead, the AI is programmed to identify individual stocks that look like they're
01:09 priced temporarily and artificially below their mean.
01:12 Then it exits positions after a few days when the price has ideally moved higher and starts
01:16 looking for the next dip to trade.
01:18 The AI relentlessly repeats the strategy over and over and over, with the goal of generating
01:22 returns by capturing as many dips as possible.
01:25 Capturing just a piece of the price action in either trade like this, rather than trying
01:28 to ride an entire anticipated rebound, is a risk management strategy, but also a likely
01:32 recognition of the limits of AI.
01:34 The powerful tool has proven itself pretty formidable when it comes to predictive analytics,
01:38 but its accuracy decreases with longer time horizons or larger, more complex conditions.
01:43 This can make it difficult to generate consistent returns with a buy-the-dip strategy.
01:47 But that's exactly where an AI can help.
01:49 It can parse through billions of data points in seconds and follow a set of rules without
01:53 deviation.
01:54 So it's just the right kind of tool to help an investor find more dips than they can find
01:57 on their own and stick to the parameters of a strategy without letting human error get
02:01 in the way.
02:02 Kaiju chose this strategy for that reason.
02:04 It's a simple concept that can be set up as a purely technical strategy, relying on
02:08 AI's pattern recognition and predictive analytics without tasking it with trying to forecast
02:13 longer horizons or more complex market conditions.
02:16 It's also a relatively conservative methodology as it's just trying to identify oversold stocks
02:21 rather than anticipate trends or predict explosive growth opportunities.
02:25 The hope is that a more conservative, by focusing on dips and large cap stocks and ETFs, AI-powered
02:30 ETF can help build trust among investors who are wary of some of the relatively more outlandish
02:35 claims that have been made about AI's market-beating abilities.
02:38 But dip is just the first in what's expected to be a growing portfolio of AI-managed funds.
02:43 While there's not much word yet on the next ETF that will be launched, Kaiju says it's
02:46 working on more AI-powered ETFs for retail and institutional investors alike.
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