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AI will change how you invest – and what you invest in – The Globe and Mail



While investors around the world rallied in the aftermath of the COVID-19 market crash, Scott Juds’s artificial intelligence-driven ETF was languishing.

The WIZ Bull-Rider Bear-Fighter Index, which uses AI to track changes in markets that determine whether it should shift its portfolio of exchange-traded funds to skew either more aggressive or conservative, suddenly couldn’t make sense of the data after an aberration as large as COVID-19.

“You had the initial shock of things which was followed by a series of closings and openings,” said Mr. Juds, the co-founder of Merlyn.AI, which runs WIZ.


He said the constant back-and-forth threw off the signals that AI use. “When it does that in a period of three months or less, you can’t properly determine momentum.”

As a result, WIZ is up just 7 per cent since its inception in October, 2019. Compare that with the S&P 500, which is up 37 per cent over the same period. Other simple index-tracking ETFs have posted similarly positive returns.

The performance of Mr. Juds’s ETF, which has suffered consistent losses since 2020, has sent investors running. At its peak, WIZ and DUDE (another Merlyn.AI ETF) had assets-under-management values of roughly US$250-million. Today, it’s just US$50-million.

But with AI constantly learning and big tweaks being made to the software with help from advisers, Mr. Juds is optimistic and said there has been considerable new interest in his products as long as they remain steady in the near future.

While multiple AI-driven ETFs have so far failed to beat the market, people like Mr. Juds still believe AI will be able to look through cluttered data to make investment decisions and eventually extract the best gains. Others believe it’ll be revolutionary for the user experience by giving retail investors greater education and control in customizing their portfolio while guiding them through different risk profiles.

Artificial intelligence has been one of many tools that large investing firms have consulted for years, but the popularity of ChatGPT has brought discussions of how AI can be relevant to investors at the retail level.

Mr. Juds said AI’s ability to find opportunities is rooted in the signal-to-noise ratio in investing.

There are countless data points in the world of equities that are simply background noise: They don’t mean anything. But buried deep within are valuable signals that point to meaningful investment opportunities in specific sectors.

“A very small signal like a tenth of a per cent in one day trend could get a 25-per-cent gain over a year,” said Mr. Juds. “But a 0.1-per-cent change in the market, that can get lost.”

Will AI take over the world? And other questions Canadians are asking Google about the technology

There are still people who remain skeptical about whether AI can actually bring greater returns simply by trying to make smarter or quicker trades.

Joel Blit, an associate professor at the University of Waterloo specializing in the economics of innovation, said there’s an old adage that fund managers are no better than monkeys when it comes to picking stocks.

“Why would we think that an AI system would be any better? If they can parse through large amounts of data and find the needle in the haystack, then presumably they could do better,” said Prof. Blit, but he said there are examples of AI stock pickers that have been unable to beat the market so far.

When it comes to faster trading times, Prof. Blit said that if every big hedge fund had ultrapowerful AI making quick trades to make the best gains, then everyone having similarly powerful programming could negate any real increase in returns.

On the flip side, if AI reads too deeply into certain signals and makes ill-conceived decisions, it could lead to more market volatility.

“If there’s some kind of signal that’s heavily correlated to past bear performance in the market and all of a sudden all these algorithms start selling at once, it could lead to a major market collapse,” said Prof. Blit.

That’s why a whole other world of AI experts see a different potential for the technology: to bring knowledge that has always been inaccessible and dense to the everyday investor in a way that’s personalized and meant to help guide investing strategy.

This form of AI could help someone figure out if their portfolio is too heavily weighted to a certain sector, or is too susceptible to changes in the credit market or an economic downturn.

Companies such as Global Predictions are already providing advice to thousands of investors with billions of dollars, with input from AI.

Led by Canadian chief executive officer and co-founder Alexander Harmsen and based in San Francisco, the company created an AI-driven platform to help people make future investing decisions.

The program, called PortfolioPilot, allows people to simply plug in the details of their financial life such as their debt, real estate and investment accounts to receive nuanced advice on whether the investments they’re making actually match the goals and risk appetite they have.

A new ChatGPT plug-in by the company allows people to have basic conversations with an AI that can make similar suggestions, simply by reading a copy and paste of your investing statements. If you have a couple extra thousand dollars you’re looking to invest, it can give you suggestions based on your existing portfolio about where to spend next.

The idea builds on the already-revolutionary effect that robo-advisers and simple investing products such as ETFs have had on making it easier to be a self-directed investor.

“The main value in AI is about personalization and being able to democratize access to this sort of expertise,” said Mr. Harmsen.

“We can reflect back to people that you’re not diversified enough or that your risk-adjusted return you’re taking isn’t high enough. We feel people need that extra step of, ‘Here’s a couple things you can do to improve your portfolio.’”

PortfolioPilot is free to use and has advised roughly 5,500 users with more than US$3.4-billion in assets. The company plans to eventually make money by releasing its own set of AI-guided ETFs.

Mr. Harmsen doesn’t see AI bringing human wealth managers to extinction. But he does hope it could push wealth managers to step up their game by increasing interactions with clients, lowering fees and moving away from simple risk-profile categories for investors to choose from, and instead allow for more personalized approaches to portfolios.

Already, he’s seen interest from portfolio managers who’d like to use his program.

Reducing ‘risk of extinction’ from AI should be on par with pandemics, nuclear war, experts warn

Edward Kholodenko, CEO of Questrade, said he sees client experience as the lowest hanging fruit where AI can make a difference. That includes helping clients understand how to make trades or how to complete a certain function on the company’s website.

He said Questrade is also developing and using AI internally, but providing advice to the public could be tricky because there are no regulations around the technology or its use of user data.

“It’s an area you have to be very, very careful … in terms of mining and using the data. We’re examining how to use the data to help our customers become more successful and financially secure,” said Mr. Kholodenko.

James Rockwood, founder and CEO of the fintech company CapIntel, said another obstacle is ensuring that AI remains compliant with rules if it were to directly provide financial advice, a service that is heavily regulated.

“People talk about how ChatGPT is so confident in everything it says but it doesn’t yet know if what it says is correct,” said Mr. Rockwood.

“You could run into issues where an AI could say something like, ‘This guarantees 100-per-cent returns,’ and a person can land in hot water.”

The Globe and Mail reached out to the Office of the Superintendent of Financial Institutions and the Canadian Securities Administrators, but neither regulatory body provided comment on whether national regulations for AI usage in Canada are coming.

A study commissioned by the Autorité des marchés financiers, Quebec’s financial regulatory body, and undertaken by the University of Montreal and Polytechnique Montréal, recommended the government create a framework for the use of AI that would identify unacceptable practices and data regulations for the use of this technology.

Depending on self-thinking robots for investment decisions certainly doesn’t come without risks. Mr. Kholodenko said investors should have a sober approach to AI, since people could create bots that push people to buy products that are not in their best interest.

And already, there are multiple get-rich-quick schemes online that have little proof of working.

One thing that experts agree on is that AI technology is in its infancy. As the technology develops and the amount of historical data that AI is able to access continues to grow, Mr. Rockwood said any prediction about where AI will prove to be most valuable in the financial world is simply that: a prediction.

“I don’t think anybody is talking about what AI is today when they’re having these discussions,” he said. “They’re talking about what could happen in the future, and that future has such a wide set of potential outcomes.”

Investing 101: A beginner’s guide to growing your money

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Tense diplomatic relations may not impact trade, investment ties between India, Canada: Experts



NEW DELHI: The tense diplomatic relations between India and Canada are unlikely to impact trade and investments between the two countries as economic ties are driven by commercial considerations, according to experts. Both India and Canada trade in complementary products and do not compete on similar products.
“Hence, the trade relationship will continue to grow and not be affected by day-to-day events,” Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava said.
Certain political developments have led to a pause in negotiations for a free trade agreement between the two countries.
On September 10, Prime Minister Narendra Modi conveyed to his Canadian counterpart Justin Trudeau India’s strong concerns about the continuing anti-India activities of extremist elements in Canada that were promoting secessionism, inciting violence against its diplomats and threatening the Indian community there.
India on Tuesday announced the expulsion of a Canadian diplomat hours after Canada asked an Indian official to leave that country, citing a “potential” Indian link to the killing of a Khalistani separatist leader in June.
Srivastava said these recent events are unlikely to affect the deep-rooted people-to-people connections, trade, and economic ties between the two nations.
Bilateral trade between India and Canada has grown significantly in recent years, reaching USD 8.16 billion in 2022-23.
India’s exports (USD 4.1 billion) to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada’s exports to India (USD 4.06 billion) include pulses, timber, pulp and paper, and mining products.
On investments, he said that Canadian pension funds will continue investing in India on grounds of India’s large market and good return on money invested.
Canadian pension funds, by the end of 2022, had invested over USD 45 billion in India, making it the fourth-largest recipient of Canadian FDI in the world.
The top sectors for Canadian pension fund investment in India include infrastructure, renewable energy, technology, and financial services.
Mumbai-based exporter and Chairman of Technocraft Industries Sharad Kumar Saraf said the present frosty relations between India and Canada are certainly a cause for concern.
“However, the bilateral trade is entirely driven by commercial considerations. Political turmoil is of a temporary nature and should not be a reason to affect trade relations,” Saraf said.
He added that even with China, India has acrimonious relations but bilateral trade continues to remain healthy.
“In fact, bilateral trade is an effective tool to improve political relations. India must make special efforts to increase our bilateral trade with Canada,” Saraf said.
India and Canada have a strong education partnership. There are over 200 educational partnerships between Indian and Canadian institutions.
In addition, over 3,19,000 Indian students are enrolled in Canadian institutions, making them the largest international student cohort in Canada, according to GTRI.
According to the Canadian Bureau for International Education (CBIE), Indian students contributed USD 4.9 billion to the Canadian economy in 2021.
Indian students are the largest international student group in Canada, accounting for 20 per cent of all international students in 2021.
Benefits of educational partnerships are mutual and hence the current situation may have no impact on the relationship, Srivastava said.



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Apple supplier Foxconn aims to double India jobs and investment



Apple supplier Foxconn aims to double its workforce and investment in India by next year, a company executive said on Sunday.

Taiwan-based Foxconn, the world’s largest contract manufacturer of electronics, has rapidly expanded its presence in India by investing in manufacturing facilities in the south of the country as the company seeks to move away from China.

V Lee, Foxconn’s representative in India, in a LinkedIn post to mark Indian Prime Minister Narendra Modi’s 73rd birthday, said the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by this time next year.

He did not give more details.


Foxconn already has an iPhone factory employing 40,000 people in the state of Tamil Nadu.


Foxconn dangles incentives for workers as iPhone shortages plague holiday season

Foxconn dangles incentives for workers as iPhone shortages plague holiday season

In August, the state of Karnataka said the firm will invest US$600 million for two projects to make casing components for iPhones and chip-making equipment.


The company’s Chairman Liu Young-way said in an earnings briefing last month that he sees a lot of potential in India, adding: “several billion dollars in investment is only a beginning”.

Taiwan election: Foxconn’s Terry Gou taps star-powered running mate


Last month, Foxconn’s billionaire founder Terry Gou said he would run for the Taiwanese presidency in next year’s election, as an independent candidate.

He said the ruling and independence-leaning Democratic Progressive Party (DPP) was unable to offer a bright future for the island and left Foxconn’s board following his decision to run.

The firm operates the world’s largest iPhone plant, in the city of Zhengzhou in Henan province.



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Foxconn to double workforce, investment in India by ‘this time next year’



Foxconn, Taiwan-based Apple supplier, has said that they are planning to double their investment and workforce in India within the next twelve months, according to V Lee’s LinkedIn post on the occasion of Prime Minister Narendra Modi’s 73rd birthday.

Taiwan-based Foxconn, the world’s largest contract manufacturer of electronics, has rapidly expanded its presence in India by investing in manufacturing facilities in the south of the country as the company seeks to move away from China.

Notably, Foxconn already has an iPhone factory in the state of Tamil Nadu, which employs 40,000 people.

V Lee, Foxconn‘s representative in India, in a LinkedIn post to mark Indian Prime Minister Narendra Modi’s 73rd birthday, said the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by this time next year.


In August this year, Karnataka governments had said that Foxconn has planned to invest $600 million for two projects in the state to make casing components for iPhones and chip-making equipment.

Earlier this month, Young Liu, Chairman and CEO of Hon Hai Technology Group (Foxconn) had said, ‘India will be an important country in terms of manufacturing in future’.

In the past, it took 30 years to build the entire supply chain ecosystem in China, he noted, adding that while it will take an “appropriate amount of time in India” and the process will be shorter given the experience. The environment too is not quite the same, he said pointing to the advent of new technologies like AI and generative AI.

Meanwhile, Apple Inc. has announced plans to make the India-built iPhone 15 available in the South Asian country and some other regions on the global sales debut day, according to a Bloomberg report.

While the vast majority of iPhone 15s will come from China, that would be the first time a latest generation, India-assembled device is available on the first day of sale, they said, asking not to be identified as the matter is private.

Apple introduced the iPhone 15, updated watches and AirPods at a gala event at its US headquarters. Sales of new products begin typically around 10 days after the unveiling.



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