JPMorgan Chase Unveils AI-Powered Tool for Thematic Investing – PYMNTS.com

J.P. Morgan Chasereportedly unveiled an artificial intelligence-powered tooldesignedto facilitate thematic investing.

The tool, calledIndexGPT, delivers thematic investment baskets created withthe assistance ofOpenAIsGPT-4model, Bloomberg reported Friday (May 3).

IndexGPT creates these thematic indexes by generating a list of keywords associated with a particular theme that are then analyzed using a natural language processing model that scans news articles to identify companies involved in that space, according to the report.

The tool allows forthe selection ofa broader range of stocks, going beyond the obvious choices that are already well-known,Rui Fernandes, J.P. Morgans head of markets trading structuring, told Bloomberg.

Thematic investing, which focuses on emerging trends rather than traditional industry sectors or company fundamentals, has gained popularity in recent years, the report said.

Thematic funds experienced a surge in popularity in 2020 and 2021, with retail investors spending billions of dollars on products based on various themes. However, interest in these strategies waned amid poor performance and higher interest rates, per the report.

J.P. Morgan Chases IndexGPT aims to reignite interest in thematic investing by providing a more accurate and efficient approach, according to the report.

While AI hasbeen widely usedin the financial industry for functions such as trading, risk management and investment research, the rise of generative AI tools has opened new possibilities for banks and financial institutions, the report said.

Fernandes said he sees IndexGPT as a first step ina long-term process ofintegrating AI across the banks index offering, per the report. J.P. Morgan Chase aims to continuously improve its offerings, from equity volatility products to commodity momentum products, gradually and thoughtfully.

In another deployment of this technology in the investment space,Morgan Stanleysaid in September that it was launching anAI-powered assistantfor financial advisers and their support staff. This tool, the AI @ Morgan Stanley Assistant, facilitates access to 100,000 research reports and documents.

In the venture capital world, AI has become a tool for making savvyinvestment decisions. VC firms are using the technology to analyze vast amounts of data on startups and market trends, help the firms identify the most promising opportunities and aid them in making better-informed decisions about where to allocate their funds.

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