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Methodology Memo

Subject: Substantiation methodology for "first AI-managed" ETF claim

Scope: U.S.-registered ETFs

Search dates: February 2, 2026 through February 4, 2026

Purpose: To document the methodology used by FINQ to substantiate the claim that its ETFs are "first AI-managed" ETFs, for FINQ's internal substantiation file.

METHODOLOGY

FINQ reviewed the U.S.-registered ETF universe using the following sources:

  • SEC EDGAR
  • Bloomberg
  • ETF.com
  • ETFDB.com
  • ChatGPT
  • Gemini
  • Grok
  • Claude
  • SEC EDGAR was treated as the primary source for official ETF disclosure language, including prospectuses, statements of additional information, registration statements, and supplements.
  • Bloomberg, ETF.com, and ETFDB.com were used as secondary sources to identify potentially comparable ETFs and cross-check fund names, tickers, categories, and descriptions.
  • ChatGPT, Gemini, Grok, and Claude were used only as research tools to help identify potentially relevant ETFs and search terms. FINQ did not treat AI-tool outputs as primary substantiation. Any potentially relevant ETF identified through an AI tool was subject to further review using SEC EDGAR, Bloomberg, ETF.com, or ETFDB.com.

SEARCH TERMS

FINQ used the following search terms:

  • AI
  • artificial intelligence
  • machine learning
  • ML
  • deep learning
  • large language model
  • generative AI
  • GenAI
  • NLP

REVIEW PROCESS

For each potentially comparable ETF, FINQ reviewed the fund name, ticker, adviser/sub-adviser, listing exchange, prospectus strategy language, SAI language where relevant, and whether the AI-related claim related to the fund's holdings theme or its actual portfolio management process.

FINQ focused on distinguishing ETFs that invest in artificial intelligence-related companies from ETFs whose investment selection or portfolio management process is itself driven by artificial intelligence.

RELEVANT RESULTS IDENTIFIED

FINQ identified potentially comparable ETFs that use AI-related terminology or AI-related investment processes. The results table retained in the substantiation file includes, among others:

  • WisdomTree AI Enhanced Value Family — AIVI/AIVL;
  • QRAFT AI-Enhanced/Powered ETFs — QRFT/AMOM/LQAI;
  • Stocksnips AI-Powered Sentiment US All Cap ETF — NEWZ;
  • Amplify AI Powered Equity ETF — AIEQ.

FINQ's review found that these identified ETFs involved one or more distinguishing features, including human portfolio manager review or adjustment of AI model output, adviser discretion over investment decisions, portfolio manager selection from an AI-generated list, or passive index tracking. The results table documents the relevant prospectus language, fund strategy summaries, and use of AI for each ETF reviewed.

ADDITIONAL ETFs REVIEWED AND DETERMINED NOT COMPARABLE

ETFTickerWhy it appeared in searchWhy excluded from main comparable table
VanEck Social Sentiment ETFBUZZUses AI-related index terminology, including the BUZZ NextGen AI US Sentiment Leaders IndexPassive/index-tracking ETF; AI-related element appears tied to index methodology/social sentiment analytics, not an AI-managed ETF portfolio process
Themes Generative Artificial Intelligence ETFWISEFund name and strategy relate to generative AIAI-themed/passive index ETF tracking companies with AI-related business operations
REX AI Equity Premium Income ETFAIPIFund name includes "AI" and strategy references AI-related companiesAI-sector/index exposure plus covered-call income strategy; not an AI-managed stock-selection ETF
iShares U.S. Equity Factor Rotation Active ETFDYNFDisclosure references machine learning and artificial intelligence methodsActive factor-rotation ETF using a broader factor model; AI/ML appears as part of a broader data-driven process, not as an AI-managed ETF strategy

FINQ retained these prospectuses in the substantiation file to document that these search results were reviewed and excluded from the main comparable analysis.

Comparable AI-managed ETF results

Comparable AI-managed ETF results
ETF NameSymbolHuman interventionProspectus QuoteFund StrategyUse of AI
WisdomTree AI Enhanced Value FamilyAIVI/AIVLThe portfolio manager has the authority to adjust the AI model output before implementing it on the ETF"The virtual portfolio manager enforces various constraints and portfolio optimization methods on the securities, while the human portfolio manager reviews the resulting portfolio and adjusts as necessary before implementing in the fund." (page 3)"The WisdomTree AI Enhanced Value Fund Family seeks to offer uncorrelated returns streams from the value universe by leveraging the expertise of the Voya Equity Machine Intelligence (EMI) team and their fundamentally driven machine learning approach." The EMI model "approaches value investing dynamically to avoid narrow style biases that may be out of favor, while still providing value exposure across equities." The strategy "seeks to capitalize on short- and long-term investment opportunities – while delivering the virtue of patience and agility, acting quickly and decisively when opportunities arise." The process "consists of five stages with varying degrees of involvement between human and machine – something the EMI team calls 'human in the loop'," emphasizing "that the strategy not only is driven by AI, but also has the proper human intervention and oversight to ensure robust security selection and risk management.""The first step in the process consists of data aggregation consisting of 10,000+ data points for each company over a 20-year history." These data points are "feature engineered by human experts to provide a more insightful view of the company versus its peers, the entire stock universe, or its own historical characteristics." "Trained on 20 years of these historical features, the virtual analysts (the true AI) take the most recent data points as input to identify companies for inclusion in the portfolio." The "virtual traders use machine learning to identify dynamic 'rules' and patterns for defining value at the company level," and "focus on shorter-term indicators, identifying proper entry and exit timing, as well as any risk events." Once approved, "these security selections are passed on to the virtual and human portfolio managers for review before being executed by the human portfolio management and trading team at Voya." Ultimately, "the model continually ingests new information and tracks the features representing the changing market conditions and dynamics of the company," seeking "to capitalize on asymmetric risk/reward patterns."
QRAFT AI-Enhanced/PoweredQRFT/AMOM/LQAIThe portfolio manager has full decision-making power"The Adviser has full discretion over investment decisions for the Fund. Therefore, the Adviser has full decision-making power not only if it identifies a potential technical issue or error with the U.S. Large Cap Database, but also if it believes that the recommended portfolio does not further the Fund's investment objective" (page 1,4)"The Fund is an actively-managed exchange-traded fund ("ETF") that seeks to achieve its investment objective by utilizing an investment strategy enhanced by the use of artificial intelligence." Under normal circumstances, "the Fund invests at least 80% of its net assets… in securities of U.S.-listed large capitalization companies," including "common stock, American Depositary Receipts ("ADRs"), and Global Depositary Receipts ("GDRs")." The Fund's adviser, "Exchange Traded Concepts, LLC (the "Adviser"), uses an investment process based on a proprietary artificial intelligence security selection process that extracts patterns from analyzing data, developed by QRAFT Technologies, Inc. ("Qraft")." The Fund "expects to hold 300 to 350 companies in its portfolio," and while the Adviser generally follows Qraft's recommendations, "the Adviser has full discretion over investment decisions for the Fund," including adjustments for "corporate actions, mergers and spin-offs.""In pursuing the Fund's investment objective, the Adviser consults a database generated by Qraft's AI Quantitative Investment System ("QRAFT AI"), which automatically evaluates and filters data according to parameters supporting a particular investment thesis." QRAFT AI "selects and weights portfolios of companies… to provide a balanced exposure to a variety of factors… including quality, size, value, momentum, and volatility." Using "deep learning technologies" and "Bayesian neural networks that estimate the uncertainty of its forecast," QRAFT AI "estimates each stock's relative superiority of price appreciation… for the next four week investment period" and "selects the top 300 to 350 stocks." It then "evaluates how each individual factor would change and/or affect a company over time, identifying the companies that have the greatest potential to outperform their U.S. large cap peers." "QRAFT AI repeats such processes every four weeks," providing updated recommendations from which "the Adviser makes or changes investments in the Fund based on the newly generated information."
Stocksnips AI-Powered Sentiment US All Cap ETFNEWZThe AI model recommends a list of securities, <strong>the portfolio manager chooses within that list</strong>"The Sub-Adviser expects that under normal market conditions, up to 95% of the portfolio assets will be invested in the securities recommended by the algorithms." (page 4)"The Fund is an actively-managed exchange-traded fund ("ETF") that seeks to achieve its investment objective by utilizing an investment strategy that leverages artificial intelligence ("AI") and natural language processing to derive a proprietary News Media Sentiment Signal (the "Sentiment Signal")." The Sub-Adviser "uses an investment process based on a proprietary ranking and selection process, which is designed to identify stocks with the most positive news coverage." Under normal circumstances, "the Fund invests at least 80% of its net assets in securities of U.S.-listed large, mid and small capitalization companies," typically resulting in "a universe of approximately 350 securities." From this universe, "the algorithms rank the securities… based on the amount of positive news available about a company and its sentiment momentum," and "the top 30 to 50 stocks are included in the Fund and are equal weighted.""The Sentiment Signal and the Sentiment Momentum Signal are each derived using natural language processing and machine learning algorithms that transform unstructured textual data from News Sources into quantified real-time sentiment signals." In this process, "machine learning is used to classify 'financial oriented' sentences (news snippets) attributed to a company as being positive, negative or uncertain." The Sub-Adviser "believes that quantification of news sentiment can be a proxy for investor sentiment" and "employs quantitative modeling, which leverages the Sentiment Signal and a trending Sentiment Momentum Signal." To generate these signals, "StockSnips gathers news information on a daily basis and evaluates such information along with a proprietary historical sentiment dataset covering approximately 5,000 US equities."
Amplify AI Powered Equity ETFAIEQNo adviser discretion—but via index tracking. The fund passively tracks the AI Powered Equity Index built from EquBot's AI model; the adviser rebalances to the index and "does not try to 'beat' the Index." Security selection/weights are set by the Index Provider (EquBot/Solactive), not by the adviser.

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Investment advice is offered through FINQ AI LLC (“FINQ”), a SEC-registered investment advisor. Such registration does not imply a certain level of skill or training and no inference to the contrary should be made. FINQ is wholly owned by FINQ Digital, Ltd. (“FINQ Israel”), an Israeli limited company. Additional information about FINQ is available on the SEC’s website at https://adviserinfo.sec.gov/. FINQ does not provide investment advisory services to individuals and only provides services to other investment advisers and ETFs. This communication does not constitute a recommendation or an offer to buy or sell or a solicitation of an offer to buy or sell any security or investment.Please note that FINQ and its personnel do not give legal or tax advice. You are advised to seek the advice of a qualified professional prior to making any decision based on any specific information contained herein. The specific tax consequences of any investment or strategy will depend on your specific tax situation.FINQ serves as a sub-adviser to ETFs managed by Tidal Investments, LLC and distributed by Foreside Fund Services, LLC. Any reference to “FINQ’s ETFs” is a reference to these sub-managed ETFs. FINQ is not affiliated with Tidal Investments, LLC or Foreside Fund Services, LLC. This site is designed for U.S. residents. Non-U.S. residents are subject to country-specific restrictions.
Important Information:
Before investing you should carefully consider the Fund's investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which can be obtained by visiting finqai.com. Please read the prospectus or summary prospectus carefully before you invest.
Fund risks: An investment in the Fund entails risk. The Fund may not achieve its investment objective and there is a risk that you could lose all of your money invested in the Fund. The Fund is not a complete investment program. It is important that investors closely review all of the risks listed below and understand them before making an investment in the Fund.
Equity Market Risk. Common stocks are generally exposed to greater risk than other types of securities, such as preferred stock and debt obligations, because common stockholders generally have inferior rights to receive payment from specific issuers. The equity securities held in the Fund's portfolio may experience sudden, unpredictable drops in value or long periods of decline in value.
Large-Capitalization Investing Risk. The securities of large-capitalization companies may be relatively mature compared to smaller companies and therefore subject to slower growth during times of economic expansion. Large-capitalization companies may also be unable to respond quickly to new competitive challenges, such as changes in technology and consumer tastes.
Limited Holdings Risk. Although the Fund does not intend to concentrate in any particular industry, it will hold a limited number of securities. As a result, it may be more volatile and have a greater risk of loss than more broadly diversified funds.
Sector Focus Risk. The Fund may invest a significant portion of its assets in one or more sectors and as a result will be more susceptible to the risks affecting those sectors. While the Fund's sector exposure is expected to vary over time, the Fund anticipates that it may be subject to some or all of the sector-specific risks: Communications sector, Consumer Discretionary, Finance Sector, Health Care and Technology Sector.
New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions. There can be no assurance that the Fund will grow to or maintain an economically viable size.
Models and Data Risk. The Sub-Adviser's evaluation of potential Fund portfolio holdings is heavily dependent on proprietary models as well as information and data supplied by third parties (Models and Data). When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon may lead to the inclusion or exclusion of securities from the Fund's portfolio that would have been excluded or included had the Models and Data been correct and complete.
Additionally, technology risk arises from the use of computer models and algorithms; any technical failures, coding errors, or cybersecurity breaches could disrupt the Fund's trading activities, potentially leading to significant financial losses and compromised data integrity.
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