A $30 million investment fund led by Intelligent Alpha relies on a trio of artificial intelligence systems—ChatGPT, Claude, and Gemini—to make its investment decisions. These AIs operate independently, with minimal human intervention, to analyze data and build portfolios, producing results that are both innovative and highly effective.

How Intelligent Alpha Operates

Intelligent Alpha gathers extensive financial data and feeds it into its AI systems, asking them to adopt the investment philosophies of renowned investors like Warren Buffett and Cathie Wood. The AIs then construct portfolios, which are lightly reviewed by humans to ensure accuracy and avoid errors, such as including recently acquired stocks or small-cap companies. This hands-off approach allows the AIs to implement their strategies without significant human bias.

The firm uses these AIs to evaluate opportunities across traditional financial markets, occasionally branching into cryptocurrency. Recently, it began exploring Bitcoin, setting ambitious price targets. For instance, the AIs suggested that under favorable regulatory conditions, Bitcoin could potentially reach $140,000.

Performance Highlights

The AI trio has demonstrated impressive foresight in macroeconomic events and individual stock picks. Key successes include:

• Boeing Short: Before a 737 MAX incident in early 2023, the AI predicted quality issues and shorted the stock.

• Nvidia Investment: Despite its meteoric rise, the AI identified Nvidia as a top pick in mid-2023. The stock has since gained over 400%.

• Chinese Stocks: Before significant stimulus measures, the AIs heavily invested in Chinese equities, aligning with hedge fund strategies that surfaced months later.

Portfolio Dynamics and Philosophy

The AIs frequently offer differing viewpoints, leading to balanced portfolios. Their ability to explain their reasoning helps ensure alignment with the fund’s objectives. Updates to the AI models often shift their approach, with ChatGPT emerging as the most contrarian thinker in the current lineup.

To balance risk and opportunity, the AIs identify sectors poised for growth and distribute weight accordingly, often mimicking the strategies of legendary investors like Stanley Druckenmiller. The result is a portfolio that captures a mix of idiosyncratic opportunities and broader macro trends.

Challenges in Crypto

While Intelligent Alpha has shown interest in crypto, a lack of comprehensive historical data has limited its foray into the sector. The AI models rely heavily on structured information, which is often unavailable for cryptocurrency markets dominated by social media speculation. However, tools like Grok, which are optimized for social media analysis, may help bridge this gap in the future.

The Future of AI-Driven Funds

Intelligent Alpha has launched an ETF, the Intelligent Livermore ETF, which uses AI to create global equity portfolios. Plans for additional funds are underway. As the technology evolves, the firm continues to explore innovative uses of AI, aiming to expand its reach into new markets and asset classes, including cryptocurrencies.

So far, the fund’s track record illustrates the potential of AI to outperform human intuition, particularly when predicting macroeconomic events and identifying breakout investment opportunities.

DISCLAIMER: This is a news article and does not constitute financial advice.