By John Collett
Would you trust artificial intelligence to help you choose investments? A recent product launched by trading platform Sharesies promises to do just that. To find out if it can outmatch the time-honoured investing thesis of doing your own research, we put it through its paces.
Sharesies’ AI “discovery” tool lets investors search for any topic or industry they are interested in, generating a list of securities from the thousands listed on Australian, New Zealand and US sharemarkets that can be bought and sold on the platform.
One of the AI’s suggested investment areas was “space tourism”, such as Virgin Galactic Holdings Inc. Credit: Virgin Galactic
The technology, AI Search, is provided by Australian start-up Telescope AI, which says it continuously monitors the service’s output to ensure the AI’s responses are reasonable and sensible.
As well as being an educational resource for those getting started in investing, it is also meant to help established investors look for ways to diversify their portfolios.
Pros
The tool is a useful way of narrowing the field within a particular investment theme, such as investments that are “environmentally friendly” from the more than 8000 companies and funds listed on sharemarkets in Australia, New Zealand and the United States that are available.
I asked the AI tool which Australian-listed investments are likely to benefit from the switch to electric vehicles. Unsurprisingly, it listed a couple of lithium miners – lithium is a key component of batteries. It also listed exchange-traded funds (ETFs), such as BetaShares Global Sustainability Leaders.
When I asked for US-listed investments it came up with Tesla, of course, but also ChargePoint Holdings Inc, which designs, develops, and markets networked electric vehicle charging systems.
Other investing ideas it came up with included “space tourism” and “vertical farming”, in which food is grown on vertical surfaces or stacked to use space more efficiently.
There is a description of each company or ETF with its price history going back five years, among other metrics, such as market capitalisation, price-to-earnings ratio and gross dividend yield.
Each company and ETF is given a risk rating on a scale of up to seven. The rating is based on how much the price has previously gone up and down in value; the higher the number, the higher the risk to investors’ capital.
Cons
The tool takes no account of your individual investment objectives and does not know anything about your personal tolerance for risk or your tax position.
As Sharesies’ disclaimer says, the names of companies and funds that the AI tool selects are not opinions or recommendations on whether to invest.
Verdict
You still need to do your homework on the companies and funds and check other sources for the accuracy of the information.
AI Search does a good job for what’s on offer, but is a little underwhelming, at least for this experienced investor. It is just the first iteration though, with enhancements to follow.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.