VanEck has rebranded of its international equity ETF with the provider turning to generative AI-powered stockpicking for the fund.
Last week, the provider announced in an ASX statement that the VanEck Morningstar International Wide Moat ETF (GOAT) would be undergoing several changes. This included a new name, with the fund now becoming the VanEck Dynamic International Equity ETF but still trading under the GOAT ticker.
At the same time, GOAT will also be switched from the Morningstar Developed Markets ex-Australia Wide Moat Focus Select Index to track the Akros Enhanced World ex Australia Index instead.
The Akros index – which was developed by VanEck in partnership with the Seoul-based AI and quantitative index specialist – was described as a “next-generation index” built using generative reinforcement learning by the provider.
The biggest change is the move to allow generative AI-powered stock selection to the fund, with the provider claiming it as Australia’s “first ETF to use AI to select international stocks”.
The strategy model will start from a blank slate, discovering, testing and validating investment signal across international markets, which VanEck said puts it apart from conventional strategies that start with a fixed factor library or human-defined view of what should work.
Each month, GOAT’s AI model will score around 1,200 of the world’s largest developed-market companies across more than 10,000 signals spanning company fundamentals, technicals and macroeconomic indicators. From this, it selects 150 companies with the highest assessed probability of outperformance.
Supporting the longevity of the model, signals that lose predictive power will be retired with new ones taking their place.
“The result is a dynamic international equity portfolio designed to learn, adapt and recalibrate as market conditions change,” VanEck said.
All changes are set to take effect from 20 July, including a reduction in the fund’s management fee from 0.55 per cent per annum to 0.49 per cent.
VanEck Asia Pacific chief executive and managing director Arian Neiron said: “The industrialisation of alpha is underway, and it will be as consequential for asset management as indexing was in the 1970s.
“AI doesn’t get anchored, it doesn’t get emotional and it doesn’t have career risk that stops it from being early. What was once the exclusive preserve of multi-billion-dollar quant shops with floors of PhDs is now accessible to every Australian with a brokerage account.
“That is not an incremental improvement. That is a structural re-ordering of who gets access to intelligence and on what terms.”
When testing, a simulated index produced a maximum drawdown of –28.03 per cent, compared with –38/41 per cent for the benchmark, while its up-capture ratio was 105 and its down-capture ratio was 85.
Neiron added: “What is compelling about the simulated record is not just the return premium, it is where that premium was earned.
“The strategy’s strongest relative performance has come in stressed, weak-cycle conditions. An up-capture of 105 and a down-capture of 85 is a rare combination. That is what genuine dynamism looks like over a full cycle.”
