Can AI Anticipate Stock Price Movements?

June 10, 2021 EDT

In recent months, the Qraft AI-Enhanced U.S. Large Cap Momentum ETF (NYSE: AMOM) has correctly forecasted the price movements of several stocks. While this is true in many instances, there have also been cases where AI had missed the mark on other stocks.

AMOM is an actively managed portfolio of U.S. large cap stocks, guided directly by AI technology. It seeks to hold stocks with exposure to the momentum factor. AMOM undergoes rebalancing at the end of each month, including reweighting holdings as well as adding new stocks and removing others.

Since inception on 5/21/19 on the NYSE until 3/31/21, AMOM outperformed the S&P 500 Momentum Index and brought a cumulative total return of 77.16% (on a market basis).

Performance data quoted represents past performance and is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the original cost. Returns for periods of less than one year are not annualized. Returns are determined based on the midpoint of the bid/ask spread at 4:00pm Eastern time, when the NAV is typically calculated. Market returns does not represent the returns you would receive if you traded shares at other times.

Market Price: The current price at which shares are bought and sold. Market returns are based upon the midpoint or the last bid/ask spread at 4:00pm Eastern time.

NAV: The dollar value of a single share, based on the value of the underlying assets of the fund minus its liabilities, divided by the number of shares outstanding. Calculated at the end of each business day.

Expense Ratio is 0.75%.

AMOM’s Ability to See the Potential Market Outlook

One of AMOM’s most notable achievements has been correctly anticipating stock price movements of Tesla since last year.

For informational purposes only. Past performance does not guarantee future results. For AMOM top ten holdings, click https://qraftaietf.com/amom.

AMOM sold off all Tesla shares in August before the September dip, when the stock fell by 14% and an additional 10% in October. AMOM then reinvested in November when the share price soared by 46.3% and didn’t sell until the end of January, when Tesla fell by 12% at the beginning of February.

For the months of February, March, and April, Tesla’s share price dropped almost a combined 22% from its January high of $900. AMOM took out Tesla during these months of downturn and reinvested in Tesla in May, making up 6.22% of its portfolio.

Furthermore, AMOM was able to correctly forecast Amazon’s stock price movement in April. Among AMOM’s largest holdings at the start of April was Amazon (AMZN), which accounted for 8.55% of the fund’s portfolio. Amazon then reported its Q1 earnings report and recorded sales of $108.5 billion, which is up 44$ from last year. Consequently, Amazon’s stock price climbed 3.4% during after-hours trading.

As of 04/14/2021, when comparing the total number of volumes traded in the past 100 days, AMOM topped 1st on the list of all ETFs traded on the New York Stock Exchange.

Not Perfect…

AMOM’s capability to pick winning stocks isn’t foolproof. For the month of April, AMOM removed Nvidia, Home Depot, KLA Corporation, Zebra Technologies, and Generac Holdings from the fund. These five stocks were considered the largest by portfolio weight. But once removed, all five stocks actually went up in price, with Nvidia going up by nearly 10% in April.

Additionally, AMOM had added a few stocks into its portfolio, but for the month of April, those stocks’ prices actually went down. Some of those include Dropbox, Hologic Inc., and Citrix Systems.

Market timing has been considered controversial at best by many people in the finance industry. Timing your trades without any solid research is pretty much equivalent to gambling and there is not a single person who can do this consistently well for a long time. You essentially have to choose the right stocks at the right price and at the right time – every single time. Your odds of winning are almost slim to none.

The point is no one can predict the stock market. Not even AI. But there are certain things that, we believe, AI can do better than humans in preparing investments. These include:

  • Analyzing large amounts of data in a short period of time
  • Analyzing data objectively without being affected by emotions
  • Learning the relationship between different data and draw quick conclusions
  • Learning when relationships are changing over time
  • Learning what data is important and what can be ignored
  • Identifying complicated patterns and trends which are not easily observable

With these optimized processes for creating portfolios, Qraft leverages AI to gather investment factors that have historically shown the potential to provide strong performances.

Where To Go From Here

AMOM tracks the top 50 U.S. large cap companies that capitalize on the movements of existing market trends. It is an AI driven ETF that focuses primarily on the momentum factor. AMOM is available to purchase on various brokerage accounts, including Fidelity, Charles Schwab, TD Ameritrade, E-Trade, Robinhood, and more. Please note that you cannot invest in AMOM directly through Qraft.

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 1-855-973-7880 or visit our website at www.qraftaietf.com. Read the prospectus or summary prospectus carefully before investing.

The Funds are distributed by Foreside Fund Services, LLC

Investing involves risk, including loss of principal. The Funds are subject to numerous risks including but not limited to: Equity Risk, Sector Risk, Large Cap Risk, Management Risk, and Trading Risk. The Funds rely heavily on a proprietary artificial intelligence selection model as well as data and information supplied by third parties that are utilized by such model. To the extent the model does not perform as designed or as intended, the Fund’s strategy may not be successfully implemented and the Funds may lose value. Additionally, the funds are non-diversified, which means that they may invest more of their assets in the securities of a single issuer or a smaller number of issuers than if they were a diversified fund. As a result, each Fund may be more exposed to the risks associated with and developments affecting an individual issuer or a smaller number of issuers than a fund that invests more widely. A new or smaller fund's performance may not represent how the fund is expected to or may perform in the long term if and when it becomes larger and has fully implemented its investment strategies. Read the prospectus for additional details regarding risks.


QRAFT AI-Enhanced U.S. Large Cap ETF: Companies in the health care sector are subject to extensive government regulation and their profitability can be significantly affected by restrictions on government reimbursement for medical expenses, rising costs of medical products and services, pricing pressure (including price discounting), limited product lines and an increased emphasis on the delivery of health care through outpatient services.

QRAFT AI-Enhanced U.S. Large Cap Momentum ETF: The Fund is subject to the risk that market or economic factors impacting technology companies and companies that rely heavily on technology advances could have a major effect on the value of the Fund’s investments. The value of stocks of technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, the loss of patent, copyright and trademark protections, government regulation and competition, both domestically and internationally, including competition from foreign competitors with lower production costs. Technology companies and companies that rely heavily on technology, especially those of smaller, less-seasoned companies, tend to be more volatile than the overall market.

QRAFT AI-Enhanced US High Dividend ETF: Securities that pay dividends, as a group, may be out of favor with the market and underperform the overall equity market or stocks of companies that do not pay dividends. In addition, changes in the dividend policies of the companies held by the Fund or the capital resources available for such company’s dividend payments may adversely affect the Fund. In the event a company reduces or eliminates its dividend, the Fund may not only lose the dividend payout but the stock price of the company may also fall.

QRAFT AI-Enhanced U.S. Next Value ETF: The value approach to investing involves the risk that stocks may remain undervalued, undervaluation may become more severe, or perceived undervaluation may actually represent intrinsic value. Value stocks may underperform the overall equity market while the market concentrates on growth stocks. The small- and mid-capitalization companies in which the Fund invests may be more vulnerable to adverse business or economic evens than larger, more established companies, and may underperform other segments of the market or the equity market as a whole. Securities of small- and mid-capitalization companies generally trade in lower volumes, are often more vulnerable to market volatility, and are subject to greater and more unpredictable price changes than larger capitalization stocks or the stock market as a whole.

Alpha – Alpha is a measure of the active return on an investment, the performance of that investment compared with a suitable market index.

AutoML – Short for Automated Machine Learning, AutoML is the automation of the machine learning process to make machine learning jobs simpler, easier, and faster.

Kirin API - Developed by Qraft’s data scientists, integrates multiple vendors to provide both macroeconomic and company fundamentals with the correct point-in-time data.