New York, NY – – Israeli asset management firm FINQ has launched two U.S. Exchange-Traded Funds (ETFs), AIUP and AINT, marking what the company claims is a first in the American market: ETFs managed entirely by artificial intelligence. The funds, approved by the U.S. Securities and Exchange Commission (SEC), represent a significant departure from traditional investment strategies and a potential turning point in the role of AI within the financial sector.
For decades, artificial intelligence has been increasingly utilized in finance, primarily as a tool to support human portfolio managers. However, FINQ’s approach fundamentally shifts this dynamic, placing the AI at the core of all investment decisions – from stock selection and weighting to portfolio rebalancing. This system continuously analyzes all 500 companies within the S&P 500 index, leveraging market, financial and textual data to inform its choices.
A Shift in Investment Authority
The introduction of AIUP and AINT challenges the established dichotomy of active versus passive investment management. Active management traditionally relies on the expertise of human portfolio managers, while passive strategies aim to replicate the performance of a specific market index. FINQ’s model proposes a third path: continuous, machine-driven evaluation and adjustment based on data analysis.
According to FINQ, its proprietary AI framework ranks all S&P 500 companies daily, and these rankings directly dictate portfolio construction. Human involvement is deliberately limited to oversight and governance, ensuring regulatory compliance and operational integrity. This structure defines a new category of investment vehicles – “AI-managed ETFs,” where artificial intelligence functions as the investment manager.
“AI in the investment world has the capacity to outperform humans,” stated Eldad Tamir, Founder and CEO of FINQ, in a recent interview. “FINQ is built on a data-only system that makes investment decisions much better than humans, as it has the ability to process immense amounts of data, without the disadvantages aligned with human fear, greed, urgency to act, and other disabling human attributes.”
Two Strategies, One AI Core
While both ETFs utilize the same underlying AI architecture and data infrastructure, they employ distinct portfolio construction techniques to achieve different investment objectives. AIUP is designed to provide long-term exposure to the highest-ranked U.S. Large-cap equities, consistently holding companies that receive the highest evaluations from FINQ’s AI.
AINT, however, adopts a more sophisticated strategy. It short-sells the lowest-ranked securities while simultaneously using the generated capital to purchase the highest-ranked stocks, maintaining a dollar-neutral position. This approach aims to capitalize on performance opportunities regardless of overall market trends.
Accessibility and the Future of Data-Driven Investing
FINQ’s decision to launch these AI-driven strategies within the ETF format reflects a broader ambition to democratize access to advanced investment technologies. ETFs are known for their cost-efficiency and ease of access, making them attractive to a wide range of investors, including financial advisors, broker-dealers, and institutions.
“AIUP and AINT reflect FINQ’s belief that the future of investing lies in systematic, data-driven decision-making,” Tamir said. “By delivering AI-managed strategies through ETFs, we aim to make advanced investment frameworks accessible within a structure investors already know, and trust.”
Challenges and Precedents
While FINQ’s launch represents a novel approach, the path for AI in stock selection has not been without obstacles. Analysts note that previous funds relying heavily on algorithmic trading have sometimes experienced high turnover rates and, in some cases, eventual closure. The success of AIUP and AINT will be closely monitored by market participants to assess the viability of fully autonomous AI in investment management.
The SEC approval of these funds signals a growing acceptance of AI’s potential within the financial industry. announcement follows FINQ securing an SEC Registered Investment Advisor (RIA) license in March of last year, enabling the company to offer AI-powered investment solutions across all 50 U.S. States. The firm has indicated plans to expand its AI-driven offerings to include hedge funds and mutual funds in the future.
Geopolitical Context and Israeli Fintech Innovation
FINQ’s entry into the U.S. ETF market underscores Israel’s growing prominence as a hub for financial technology innovation. The country has fostered a vibrant ecosystem of startups specializing in AI, cybersecurity, and fintech, attracting significant investment and talent. This launch positions FINQ as a pioneer in applying these technologies to the traditionally human-driven world of asset management.
The performance of AIUP and AINT will serve as a crucial test case for the broader adoption of fully autonomous AI in investment management. Market observers will be scrutinizing their returns, volatility, and risk-adjusted performance compared to both human-managed and algorithm-assisted funds to gauge the technology’s effectiveness and potential to reshape the future of investing.
