This morning, Motif and Goldman Sachs have launched a suite of five exchange traded funds based off of thematic trends that Goldman Sachs researchers identified as critical.
“They gave us 25 innovations and we packaged them into five ETFs that have consistent relevance,”
This sounds like quite an interesting concept -
Walia says that Motif Investments is using data science and machine learning to build a better mousetrap for the financial services industry — and no less esteemed a financial services firm than Goldman Sachs has become the company’s first customer.
There is one critical question that financial advisors who are developing new investment strategies need to consider, according to Walia. And that’s whether the index that a financial services firm is creating is diverse enough to take advantage of all of the opportunities a certain thematic investment strategy may present.
To him, most strategies aren’t diversified enough, because they don’t include the breadth of public and proprietary research that Motif has scoured to create its indices.
“If you were to invest in a thesis and wanted to give your clients an opportunity to do that, you could pick the usual suspects,” Walia says. “We look at patent filings and academic papers… the difference is we’re doing it at scale.”
“What we’re trying to do collectively is, instead of guessing when to buy low and sell high, we are trying to predict what are the things that are going to happen in the future that are going to drive disproportionate earnings growth,” says Walia.
I’m sure that machine learning will play a bigger & bigger part in creating ETFs like these in the future.
Somehow removing humans (at least partially) from the equation seemingly hasn’t reduced their costs though, there’s a
5 percent annual management fee that Goldman is charging on assets invested in the fund.
Would anyone here be interested in investing in ETFs that’ve been created like this?