Simplify Asset Management to roll out ETFs based on AI-driven stockpicking

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Watch on - Simplify Asset Management plans to roll out three new exchange-traded funds that rely on artificial intelligence rather than human beings to select portfolio holdings, adding to a nascent sub-sector that has so far delivered underwhelming results for investors.

In an SEC filing late on Tuesday, the ETF provider said it will rely primarily on recommendations from models designed by Boosted.ai, an AI consulting firm serving the financial industry, when making buy or sell decisions. According to data from Morningstar Direct, a total of 13 ETFs already incorporate artificial intelligence into their investment process, although the 0.20% management fee that Simplify proposes to charge is well below the median of 0.75%. That low fee may tempt at least some of the many skeptical investors who have lingered on the sidelines to dip their toes into this still-new approach, said Todd Sohn, ETF and technical strategist at Strategas Securities.

"I'm not sure the technology is there yet, or that it's speaking to investors,” said Bryan Armour, an ETF analyst at Morningstar.

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