Pictet AM extends its AI Enhanced active ETF range to emerging markets as inflows top $1bn

Pictet Asset Management has launched today the Pictet AI Enhanced Emerging Equity active UCITS ETF (PQEM), bringing its AI-driven enhanced indexing approach to emerging markets equities. It is the fifth vehicle in the AI Enhanced range, which David Wright, Head of Quantitative Investments at Pictet Asset Management, says it now completes.

Since their global launch, the firm's AI Enhanced active ETFs have raised more than $1bn.

Four listings and a 1% to 1.5% outperformance target

PQEM is listed on Xetra (EUR, main segment), Borsa Italiana (EUR), SIX Swiss Exchange (CHF) and the London Stock Exchange (USD). Pictet AM now has six active ETFs in the US and five in Europe.

Through active enhanced indexing, the ETF aims to stay very close to its benchmark in risk and exposure while adding an extra source of return through systematic active management. The goal is consistent outperformance of 1% to 1.5% a year net of fees, with a beta of 1 and tracking error capped at 2%.

The investment process is the same one applied to the four AI Enhanced active ETFs Pictet AM listed in Europe earlier this year.

An AI model reading more than 400 variables per company

The strategy relies on Pictet's proprietary AI model, which analyses more than 400 variables for each listed company. It combines fundamental data, sentiment indicators and market information neutralised against common factors (style, sector, geography) to isolate each company's truly specific component.

The process is closely supervised by the Pictet quantitative team that developed the model, which retrains the algorithm every quarter and monitors the portfolio. According to the firm, the result is clean idiosyncratic alpha.

Why emerging markets suit the AI approach

The launch extends a European ETF push that also saw Pictet AM appoint Alfred Le Léon as ETF distribution director for EMEA. For Wright, demand for the first four European ETFs shows growing investor appetite for AI as a cost-efficient route to excess returns.

The strong demand for our first four AI Enhanced active ETFs in Europe demonstrates investors' growing interest in AI as a way of achieving excess returns over the benchmark while keeping costs down. Emerging markets lend themselves perfectly to this approach: they are the asset class in which AI's ability to identify complex patterns that humans cannot see can generate the greatest added value. Pictet AI Enhanced Emerging Equity completes the range and offers investors a further core building block for constructing their portfolios.

David Wright, Head of Quantitative Investments, Pictet Asset Management

Pictet AM frames the launch as part of its commitment to offering investors tools that combine the ability to generate excess returns with transparency and efficiency, without significantly increasing risk and while keeping costs contained.