(Yicai) Nov. 15 -- China’s first stock index series to use artificial intelligence to build an equity portfolio has been launched by tech giant Baidu and partners, marking a major innovation in financial market investment.

The High-Degree Indexes were jointly developed with Sino-Securities Index Information Service, which specializes in index and indexation investment services, and broker Gaohua Securities. The three partners unveiled the indexes on Nov. 12 at the Baidu World Congress 2024 in Shanghai.

The indexes rely purely on publicly available information and Baidu’s Ernie bot for stock selection, aiming to simulate the thinking of professional investors in terms of reasoning and information processing, before finally putting together a portfolio.

The first two launched are the Sino-Securities Large Language Model Robustness 50 Strategy Index and the Sino-Securities Highly Large Language Model Large Cap Selection Strategy Index. The former focuses on stable listed companies, while the latter targets firms with large market capitalizations and high liquidity.

According to the simulation data, the total gains of the Robustness 50 Index in the past three years would have exceeded 60 percent, significantly higher than the 5 percent increase in the Shanghai Composite Index and above the 20 percent rise in the CSI 300 Dividend Index. The Cap Selection index would have risen 1.5 percent over the past three years, while the CSI 300 has fallen 17 percent over the same period.

Asked when an exchange traded fund based on the indexes will be launched, Zhang Xing, chief executive officer of Gaohua Securities, said that the Beijing-based brokerage is cooperating with other financial institutions and will gradually launch investment products based on the new indexes.

There are already ETF products in the international markets assisted by large language models for stock selection and portfolio management. The Intelligent Livermore ETF launched by Intelligent Alpha, a US fintech company, uses ChatGPT and Google’s Gemini chatbot for stock selection and portfolio management.

Editor: Tom Litting