How State Street Has Used AI to Find ‘Hidden Gems’ Since 2018
ChatGPT has taken the internet by storm, triggering a new wave of speculation surrounding how artificial intelligence can disrupt various industries and markets. Yet AI has already been at work for years on Wall Street, where State Street and other companies have grasped onto the concept to help put together innovative exchange-traded funds.
Matt Bartolini, head of SPDR Americas Research at State Street Global Advisors, joined the “What Goes Up” podcast to talk about using AI in portfolio construction, and where he sees the technology going in the future. His firm's $1.7 billion SPDR S&P Kensho New Economies Composite ETF (ticker: KOMP) is up about 11% so far this year.
Here are some highlights of the conversation, which have been condensed and lightly edited for clarity.
Q: How did you see the launch of ChatGPT?
A: A lot of the AI work that we've done is within portfolio construction and index selection on some of our funds. So we were aware of the ability to use things like natural-language processing, predictive text. But also even just in our daily lives, some of the functions of ChatGPT we've probably just been benefiting from just in very small morsels. The first time I saw it, we were playing around with it — ‘write us a blog post about the benefits of ETFs,' and it got it probably 80% correct in how we would want to structure the argument.
And that's where ChatGPT is, that it kind of gives you about an 80%. I was joking with some of my colleagues who have older kids that ChatGPT would probably be a B-minus student if it only ever turned in its homework because that's the surface level it gets.
Q: Talk to us about the SPDR S&P Kensho New Economies Composite ETF. How exactly does AI help in stock picking?
A: The
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