Q1 2019 served as another reminder to investors of the opportunity in data-driven and AI human-bias-free investment solutions. The EquBot AI Investment Platform turned December’s volatility into an opportunity to reposition the AI Equity Powered ETF portfolio for benchmark-beating investment gains to start 2019. While the funds’ top large-cap and technology exposures are well covered, we were extremely pleased with the performance in some of our lesser known mid-cap trades like Coupa Software and Cadence Design systems (+46%, and +36% respectively when all was said and done at end of the quarter). Most of the fund’s positions contributed positively toward Q1 performance but there were a handful of technology and pharmaceutical names that dragged on performance like Mohawk Industries and Nektar Therapeutics. We think it is important to remind investors that the system driving AIEQ continues to learn from every trade and each change in market conditions with the power of AI. We look forward to leveraging our perpetually improving AI investment knowledge base for our investors in 2019 and beyond.
AIEQ returned 18.96% for the quarter ended March 31, 2019, which was about 5.5% ahead of the broad US equity market. The AI’s stock selection engine was firing on all cylinders, picking winners from essentially every equity sector in the US market.
At the sector level AIEQ’s strongest contributor was Information Technology (+25.8%), which added nearly 7% to overall return for the quarter. This is not surprising, given the surge in technology stocks during the period. With that said, the technology holdings in AIEQ outperformed the overall tech sector by nearly 6%. AIEQ’s investment in Financials and Communications Services had similar results, outperforming the sector by 4% and 8%, respectively, in Q1 2019.
At the security level, positive contributors to AIEQ’s performance were SS&C Technologies (SSNC, +41.4%), Netflix (NFLX, +33.2%) and Coupa Software (COUP, +44.7%). Companies detracting from performance included Green Dot Corp (GDOT, -23.7%), Northrup Grumman (NOC -5.9%) and CBOE Global Markets (CBOE, -2.1%).
Looking at fundamental factor performance, factors contributing positively were exposures to global markets, the US market, and the software industry. Negative contributors included the style factor Size, the banking industry and distributors of consumer staples.
Breaking out style factors, those contributing positively in Q4 included exposures to Trade Activity, Growth and Earnings Variability. Those contributing negatively were led by exposures to Size, Volatility and to a lesser extent, Dividend Yield.
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477), or by visiting www.aieqetf.com. Read the prospectus carefully before investing.
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. The equity securities held in the Fund’s portfolio may experience sudden, unpredictable drops in value or long periods of decline in value. This may occur because of factors that affect securities markets generally or factors affecting specific issuers, industries, or sectors in which the Fund invests such as political, market and economic developments, as well as events that impact specific issuers.
The Fund is actively-managed and may not meet its investment objective based on the success or failure of the Equbot Model to identify investment opportunities.
Fund holdings are subject to change. For full holdings information, please visit www.aieqetf.com.
The portfolio managers may actively and frequently trade securities or other instruments in the Fund’s portfolio to carry out its investment strategies. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.
Some of the models used by the Adviser for the Fund are predictive in nature. The use of predictive models has inherent risks. When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks. For example, by relying on Models and Data, the Adviser may be induced to buy certain investments at prices that are too high, to sell certain other investments at prices that are too low, or to miss favorable opportunities altogether. Similarly, any hedging based on faulty Models and Data may prove to be unsuccessful.
The Fund is distributed by ETFMG Financial LLC, which is not affiliated with Equbot. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”).