Jim Rogers Launches AI-Driven ETF

Legendary investor Jim Rogers, creator of the Rogers International Commodities Index (RICI), has announced a new exchange-traded fund (ETF) in the global macro space.

The Rogers AI Global Macro ETF (BIKR), launching Thursday, is an ETF of ETFs that "seeks to provide investors with an optimally weighted global portfolio," according to a release. The new fund utilizes a proprietary Artificial Intelligence model, which it combines with Rogers' own experience. With new ETFs emerging constantly, and the industry generally growing at an impressive pace, BIKR is launching into a field that is crowded with competitors. Here's how Rogers' new fund may set itself apart:

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Revolutionary AI Application

Rogers' ETF will be "the first passive artificial intelligence-backed ETF that uses AI to determine every investment decision," according to the release. The fund will also be unique in that it will reveal the procedures behind every investment decision that is made. All of that information will be available at the ETF's website, www.BIKRetf.com.

BIKR is being launched by Ocean Capital Advisors, where Rogers is chair, in partnership with ETF Managers Group. The fund will focus primarily on single-country ETFs. Rogers' role, supported by the AI BIKR employs, will include finding, tracking and projecting leading economic indicators.

BIKR Aims to Compete With Large- and Mid-Cap Equity Indexes

BIKR's objective is to "achieve long-term capital gain with an emphasis on capital preservation while outperforming recognized global large and mid-cap equity indexes." In order to achieve this , BIKR will invest primarily in global equity markets. According to the fund's prospectus, which was filed with the U.S. Securities and Exchange Commission on June 11, 2018, the fund "seeks to provide investment results that [...] correspond generally to the total return performance of the Rogers AI Global Macro Index." The SEC filing also suggests that BIKR will use a passive approach in trying to meet its investment goals. The fund will not try to beat the Rogers AI Global Macro Index, and it will not "seek temporary defensive positions when markets decline or appear overvalued other than those indicated in the Index."

As far as fees are concerned, BIKR plans to levy a management fee of 0.75%, as well as an acquired fund fee and expense item amounting to 0.43%.

About the Index

Because so much of BIKR's performance will hinge on the Rogers AI Global Macro Index, it's worth exploring the background of this component of the project. The Index originated earlier this year and was developed by Ocean Capital Advisors. Per the SEC filing, "the Index tracks the performance of single-country (including emerging markets) exchange-traded funds that each track a broad-based index composed of equity securities primarily listed on an exchange in the applicable country or an ETF tracking the 1-3 year U.S. Treasury Bond market." The Index will allow for small-, mid-, and large-cap companies within the underlying, single-country ETFs.

About the AI

BIKR is unique in its utilization of an AI algorithm. This model will analyze macroeconomic data, including volatility, interest rates, Gross National Product (GNP) and more, using the results to try to predict changes in the markets of individual countries as well as the global economy. If and when the algorithm reduces or eliminate exposure to a particular country, the reduction will be replaced with an equivalent position in a Treasury ETF.

The ETF will be rebalanced on the first business day of each month, with individual countries capped at a 10% weighting at the time of rebalancing. As of the beginning of June, the Index tracked ETFs representing 39 countries, with Brazil (7.15%), South Korea (4.17%), Hong Kong (3.96%), and Mexico (3.54%) receiving the largest allocations.

For Jim Rogers, the new ETF is a chance to leverage the investing public's interest in ETFs and to hopefully improve upon the existing models. "The internet and artificial intelligence are changing and have changed everything we know including finance and investing," he said in a release. "Ocean's new ETF is part of the same trend. I hope we get it right. We will all be extremely pleased someday if we do." (Read more: 3 Ways to Trade the Rise in Robotics and Automation)

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