This Week's ETF Launches: iShares Gets “Evolved
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Posted On: 04/04/2018 3:30:47 PM
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This Week's ETF Launches: iShares Gets “Evolved” With New Machine Learning ETFs
David DierkingApr 04, 2018
Artificial intelligence is quickly becoming something that impacts our everyday lives.
It’s being used in robots that can do everything from building machines to driving cars to performing delicate surgeries. It’s emerging in the financial world as well. We’ve got ETFs that focus on companies using AI and we’ve got an ETF that is using AI to make investment decisions. Given these developments, it was just a matter of time before one of the major providers got in on the action.
http://etfdb.com/news/2018/04/04/etf-launches...c-48449885
BlackRock Uses AI to Manage New Sector Funds
BlackRock’s iShares ETF lineup is known for its variety of ultra-low-cost passively-managed options, but, this week, it adds seven funds that are a major deviation from that theme. The “Evolved” group of funds are actively-managed and use data science and machine-learning tools in order to categorize and choose companies for their portfolios.
The Evolved methodology also introduces 12 classifications of companies instead of the GICS standard of 10 and allows companies to qualify for more than one category. CVS Health Corporation (CVS) is used as an example in the company’s literature.
GICS categorizes the company in the consumer staples group, but it, obviously, also has a big presence in the healthcare space. Evolved places CVS not only in the consumer staples group, but also in its new healthcare staples category.
The methodology is designed to provide a more accurate assessment of company exposure within the economy. To determine where companies should go, data science, word recognition, speech patterns and other artificial intelligence technology is used. It represents BlackRock’s first major foray into the AI space.
All seven ETFs carry an expense ratio of 0.18%, which makes them competitive with most ETFs in the marketplace and far cheaper than just about any actively-managed product.
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