STOXX Uses AI To Build Index01.23.2018
STOXX Ltd., the operator of Deutsche Börse Group’s index business and a global provider of innovative and tradable index concepts, introduced the world’s first index that uses AI-related algorithms to select companies exposed to the artificial intelligence (AI) megatrend at the Inside ETFs conference in the U.S. The new index will be available as of 23 January 2018.
The STOXX® AI Global Artificial Intelligence Index comprises around 200 companies from a wide range of industries that invest heavily in the development of new AI technologies such as technology, telecommunications, finance, and internet services. These companies are considered ‘digital pioneers’ that are well-positioned to benefit from the increased adoption of AI technologies, among them Apple, Deutsche Telekom, Bank of America and Facebook.
The new STOXX AI index selects its constituents by using artificial intelligence technology, and it is the first thematic index to do so. For the selection of the index constituents, STOXX has partnered with Yewno, an award-winning AI company based in Silicon Valley, which applied its knowledge graph technology to assess companies’ intellectual property (IP). The key criterion used in the selection process is the identification of patent filings related to AI, which can indicate leading AI innovators as well as AI adopters. The underlying universe for the index composition is the STOXX Global and Developed Markets Total Market Index, which tracks around 7,000 stocks.
“We are proud to be a partner of STOXX for the launch of the AI index. Our underlying knowledge graph and AI technology screens a large volume of structured and unstructured data such as official filings and patents in order to detect companies that are investing in AI-related technologies and research. The core intelligent framework behind Yewno’s technology leverages advanced techniques typically applied within the fields of complex systems, computational linguistics and AI, and provides a unique platform to readily generate intelligent signals such as data packages, indices, and advanced analytics,” explained Ruggero Gramatica, CEO Yewno Inc.
“The explosion of data collection fueled the advance of AI. Today’s early adopters are set to be tomorrow’s AI leaders,” said Matteo Andreetto, CEO of STOXX. “AI technologies present an unrivalled investment opportunity, yet investors need solutions to discern hype from a real opportunity. With our two new transparent, rules-based AI indices for AI-focused investors we offer them choice: on the one hand, a classical, revenue-based approach; on the other hand, a progressive, AI IP-based approach, where an AI algorithm is used in the selection of companies. The latter index is a digital disruption in itself, as it is the first-ever AI index based on AI.”
In addition to the innovative AI index based on AI, STOXX also launched the STOXX® Global Artificial Intelligence Index, which includes companies with a revenue exposure above 50% to AI-related sectors.
Company selection of the STOXX AI Global Artificial Intelligence Index is based on two measures:
AI IP contribution:
This measure indicates the percentage of total AI patents registered to a company vs. the total number of AI patents registered globally over the same period.
It indicates the significance of each company in the AI space.
AI IP exposure:
This measure indicates the percentage of total AI-related patents granted to a company vs. the total number of patents registered to the same company over the same period.
It indicates the significance of AI-related IP in the company’s overall IP portfolio.
The STOXX AI Global Artificial Intelligence Index includes only those companies that belong to the top three quartiles in both dimensions. The final selection of components is subsequently equal-weighted. The index composition is reviewed on a quarterly basis.
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