An exchange-traded fund driven by artificial intelligence has just loaded up on shares in Tesla — and it has a history of correctly predicting the stock’s price swings. The electric-vehicle company now makes up 6% of its portfolio, and is the fund’s third-largest holding after online retailer Amazon AMZN, +1.94% and social-media platform Facebook FB,+3.05%.
The Qraft AI-Enhanced U.S. Large Cap Momentum ETF, trading as AMOM AMOM,+2.92% on the New York Stock Exchange, bought around $1.4 million worth of Tesla TSLA,+3.16% shares in the first week of May. The fund has avoided the company for months, since it dumped all its Tesla shares around the time the stock was trading at record highs.
AMOM has been listed in New York since May 2019, and has delivered total returns of 4% so far in 2021 and 55% in the past year — outpacing its benchmark, the S&P 500 Momentum ETF SPMO,+2.02%, which has returned a comparable 35% since May 2020.
AMOM is an actively managed portfolio driven by artificial intelligence, tracking 50 large-cap U.S. stocks and reweighting its holdings each month. It is based on a momentum strategy, with the AI behind its stock picks capitalizing on the movements of existing market trends to inform the decision to add, remove, or reweight holdings. The artificial intelligence scans the market and uses its predictive power to analyze a wide set of patterns that show stock-market momentum.