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The Q.ai Team

How Q.ai Is Similar to a Hedge Fund

How Q.ai Is Similar to a Hedge Fund

We always like to say that Q.ai is like a hedge fund in your pocket. But what exactly do we mean by that?

In order to understand the comparison, let’s first dive into what a hedge fund is..

What is a hedge fund?

A hedge fund refers to an actively managed pool of investments with a manager who uses a gamut of strategies to protect gains and maximize returns. 

For example, a hedge fund manager often buys with borrowed money and trades esoteric assets. With borrowed money, they’re able to buy more of particular assets to multiply their potential returns for their clients.

That’s why hedge funds are largely considered risky, alternative investments. Never mind that hedge funds are not quite as heavily regulated by the Securities and Exchange Commission (SEC) as mutual funds.

Hedge funds have a historical track record of performing well, but they are investment vehicles for institutional investors. They only accept “qualified” investors with annual incomes that exceed $200,000 or who have net worths that exceed a cool million, not including their primary residence. Some hedge fund managers set even higher minimums to be part of their pools. And they all charge fees of about one to two percent of assets, as well as performance fees that could be about 20 percent of profits.

In other words: Individual investors don’t necessarily have access to hedge funds. And that’s where Q.ai, a “hedge fund in your pocket,” comes into play.

How does Q.ai compare to a hedge fund?

Q.ai functions like a personal hedge fund because it pools your money into AI-powered strategies to which you wouldn’t otherwise have access. These strategies are called Kits, and they’re further broken down into those with broad categories (Foundation Kits), those based on short-term trends (Limited Edition Kits) and those with unique strategies (Select Kits). 

Once the team decides how the Kit’s investment universe will be structurally expressed, AI takes over to select securities every week and allocate their weights. The AI learns and behaves differently for each Kit because every single one is exposed to different securities and the features of those securities.

From there, Q.ai leverages AI to also help users manage risk between the various Kits in which they’re invested. This level of AI allocation and diversification protects users’ gains and maximizes their potential returns—just like a hedge fund manager would do for clients.

On Foundation Kits, Q.ai also offers a Portfolio Protection feature, which works to predict any trouble ahead with “hedging” techniques. Hedging refers to the process of using investments and other financial products to offset specific risks. A well-designed hedge offsets a specific risk factor.

Q.ai’s Porfolio Protection is a combination of two major benefits:

  1. Unique assessment of exposure to risk factors for each user
  2. A sophisticated prediction system to apply hedges at specific times

If Q.ai indeed identifies changes in factors like interest rate, oil prices or volatility that could take a toll on a user’s investments, it’ll reallocate and add hedges accordingly. 

Not many robo-advisors (or investment advisors) offer hedging. If they do, they likely lack a systematic prediction process, instead offering static hedges that they consistently apply, which unnecessarily limits upside in many circumstances. Some add hedges based on “gut feel,” and some add reactionary hedges after a downturn or at the wrong time entirely.

Not even all hedge funds necessarily hedge risk, even though the name comes from the incorporation of hedging activities. In fact, typically, hedge funds “hedge” by short selling and/or using options, which can increase risk. Other hedge funds have the same legal structure but hold only long investments like  individual stocks, bonds and ETFs. So, sure, many of their “hedging” activities can reduce your overall portfolio risk, but each individual investment is actually risky in and of itself.

Therefore, Q.ai allows you to invest and trade much like a hedge fund trader without the hefty requirements or costly commissions—and with actually hedging to offset risk, not create it. In other words: It’s even better than a hedge fund, and you can carry it in your pocket. 

How to select a Foundation Kit

Selecting a Foundation Kit is easy. To get started, take a look at the various Foundation Kits that Q.ai has on offer:

  • Value Vault Kit
  • Emerging Tech Kit
  • Global Trends Kit
  • Power Factor Kit

Our team analyzes the market to develop investing themes for all of our Foundation Kits, using machine learning parameters and AI to look for opportunities and allocate assets. Our AI then rebalances these allocations weekly.

To choose a Kit, consider your risk tolerance, including your investing goals and time horizon. Once you’re ready, fund your account with a minimum of $100, and sit back and watch our AI work to make it grow over time.

Q.ai is the trade name of Quantalytics Holdings, LLC. Q.ai, LLC is a wholly-owned subsidiary of Quantalytics Holdings, LLC ("Quantalytics"). Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC ("QAI"), an SEC-registered investment advisor. QIA’s investment advisory services are ONLY available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The content in this newsletter is for informational purposes only and does not constitute a comprehensive description of Q.ai's investment advisory services.

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