Euclidean Targets US Value Stocks with AI-Driven ETF 

Investment advisor Euclidean Technologies Management has launched its first exchange-traded fund (ETF), the Euclidean Fundamental Value ETF. Utilizing artificial intelligence (AI), the actively managed US equities fund finds value stocks. Currently managing about $130 million in assets, the NYSE Arca-listed ETF has an expense ratio of 0.95%. 

The investing strategy of the fund starts with a universe of US-listed stocks with market values of more than $1 billion, excluding foreign firms and those categorized as financial.   

Each company’s earnings are forecasted using machine learning, taking into account a variety of information like financial statements, historical stock prices, industry classification, and market size. To discount results and establish a discounted earnings prediction, the model also accounts for uncertainty. 

Employing an “earning yield” metric resulting from the model’s computations, companies are ranked according to how affordable they are in comparison to the discounted earnings prediction. The algorithm also filters out potential “value traps,” or businesses that might seem affordable but are probably going to perform poorly in the long run. 

The ETF normally holds 60 to 70 securities with high ratings, ensuring that every component has been thoroughly screened to prevent false or unfavorable information. Each quarter, the portfolio is rebalanced, and the components are typically equally-weighted. 

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