Nope, that is not a typo. I am not referring to the ‘intelligent investment’, rather we will discuss a latest vogue of the investment world: Intelligence Investment. In the last 50 years, computing power has gone up by a trillion times. Primarily, what ‘Terminator: Rise of Machines’ showed us a couple of decades ago, is almost becoming a reality these days. What once started as replacing repetitive, labour intensive human job, is now taking over the responsibility of solving our most complicated problems.
An instance of one such problem would be picking up the right stocks for investment. Humans tend to become emotional. That bias often hampers our ability to take the right decision. Luckily, machines do not face this issue. A few days ago, I talked about the Alpha SIP which is an algorithm based method of switching funds in your portfolio so that you can earn an ‘alpha’ in your investment. This time around, I found one more such tool which claims to leverage the power of AI to help you pick, rebalance and churn your portfolio. Enter: Upside AI smallcase. In case you do not know what a smallcase is, please refer to article here.
What is Upside AI and it’s Features:
Upside AI is a smallcase started back in 2017 with the hope to leverage technology to rule out bias, panic and euphoria while taking investment decisions. Your fund manager in this smallcase is not a a conventional human. Rather, you are betting on the analysis of a machine which is capable of computing much larger data sets. Some noteworthy points of this smallcase are:
- Smallcase claims that the entire stock market is scanned 50 million times in a quarter to come up with the best stocks to bet on.
- The companies are sorted and compared on various aspects of fundamental analysis.
- For obvious reasons, the AI calls are unbiased.
- AI also evaluates the momentum of the stocks. So recommended stocks are not only the ones with strong fundamentals but also the ones which are in higher demand in the market.
- Portfolio is diversified to lower your risk. How? Not more than 10% of your capital goes into a single stock. And not more than 35% goes into a single industry.
- Quarterly Rebalancing and safety checks are in place to ensure that companies are reporting financials accurately.
Types of AI Upside Smallcase
So under this theme there are two types of smallcases you can pick from:
Upside 250 picks a set of stocks from the top 250 listed companies on NSE in terms of market capitalization. After a constant screening of these stocks, intelligence based investment system picks 10-25 stocks after backtracking on past performance and evaluating volumes for momentum and suggests the same to you. Every quarter a rebalancing activity is done, and you have to manually make changes to your portfolio basis the recommendation. The fund is rated as a moderate risk instrument.
Instead of top 250 NSE companies, upside Multicap has entire universe of listed organizations in the scanning portfolio. AI would pick top 10-15 stocks out of these companies basis the parameters mentioned earlier.
What’s My Take?
Well, I am totally up for letting machines handle my portfolio. I can relate to the emotions overpowering the quality of the decision. However, there’s a catch. I passed the opportunity to invest in Alpha SIP because for the algorithm to work, minimum investment needed is 20k a month as per finpeg. I am stuck with a similar problem here too. Minimum investment for Upside 250 is 55k and for Upside Multicap is 36k. It is a strong entry barrier in my opinion. However, this smallcase is in my watchlist for sure. Intelligence investment has a long way to go before it trickles down to a retail investor like me or you. Do you plan to invest in this? Let me know in the comment section below or on Facebook, Twitter or Instagram.
Until Next time. . .