Horizons launches Canada’s first AI-driven ETF

Nov 2nd, 2017 | By | Category: Equities

Horizons ETFs has launched the Horizons Active AI Global Equity ETF (MIND) on the Toronto Stock Exchange. MIND is Canada’s first ETF to use artificial intelligence for all security selection decisions.

Horizons launches active equity dividend ex-North America ETF

Steven Hawkins, president and Co-CEO of Horizons ETFs.

The fund provides actively managed exposure to global equity indices, by primarily investing in other ETFs listed in North America.

MIND is sub-advised by Mirae Asset Global Investments, which uses an investment strategy entirely run by a proprietary and adaptive artificial intelligence system that analyzes data and extracts patterns.

The machine learning process underpinning MIND’s investment strategy is known as Deep Neural Network Learning – which is a construct of artificial neural networks that enable the AI system to recognize patterns and make its own decisions, much like how the human brain works, but at hyper-fast speeds.

“MIND is expected to be able to more efficiently process market data and allocate assets than any human manager,” said Steve Hawkins, president and co-CEO of Horizons ETFs. “Unlike today’s portfolio managers who may be susceptible to investor biases such as overconfidence or cognitive dissonance, MIND is devoid of all emotion. It is purely systematic in how it makes investment decisions.

“Despite Canadian investors slowly overcoming their home bias and wanting to invest in international markets, the expertise required for a global strategy can be costly and time-consuming for the average investor to pursue. In our view, an AI system, as an active manager in this space, significantly streamlines the process and makes buying a whole world of ETFs as easy as trading a single stock on an exchange.”

MIND monitors more than 50 investment metrics as the key development inputs from which it analyzes patterns and makes investment decisions. Some of the these primary inputs include: 80-day simple moving average, beta, sharpe ratio, money flow, 6-month relative performance, 90-day volatility, simple RSI, exponential RSI, Wilder smoothing RSI, moving average crossovers, maximum drawdown, short interest and correlation.

MIND rebalances its holdings on a monthly basis. Additionally, the AI adheres to a set of minimum and maximum exposure requirements, such as cash and cash equivalent holdings, regional restrictions and country restrictions.

The fund has a management expense ratio of 0.55%.

Taeyong Lee, president and global head of ETF business, Mirae Asset, said:  “The launch of MIND represents another milestone for Horizons ETFs and Mirae Asset’s global ETF business, as we strive to offer the best possible investment solutions through global collaborations.”

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