Australia’s top investment funds vs ChatGPT and Bard
We compared the performance of Australia's top investment funds against AI-designed portfolios.
- A portfolio created by ChatGPT holding 23 stocks has risen 4.15% since 11 May 2023, when the test started
- The Bard portfolio holding 19 stocks has risen 7.15% on average over the same time frame
- The top 10 listed managed funds in Australia rose 5.31% on average
- All performance figures are to November 17, 2023
Comparing the market
We wanted to see how our AI portfolios performed against the market. To compare, we looked at the performance of the benchmark indices from Australia and the US – the S&P/ASX 200 index and S&P 500 index:
- The S&P 500 index has risen 9.28% since 11 May 2023, outperforming the top 10 hedge funds plus our ChatGPT and Bard portfolios
- The ASX 200 index has fallen -2.79% in that same time and is the worst performing of the portfolios we tested
Which stocks did ChatGPT select?
We asked ChatGPT to create a stock portfolio using the main investment strategies and approaches used by the top 10 managed funds in Australia.
Criteria included high-quality businesses trading below their intrinsic values, high profit margins and a sustainable competitive advantage.
Following our prompts, it selected 23 stocks, mostly from the United States and many household names. ChatGPT's portfolio was diversified across sectors and included some stocks from Australia, the UK and parts of Asia.
- US equities made up 69.6% of the portfolio
- EU/UK equities (4%)
- APAC/Asia equities (13%)
- Australian equities (13%)
Which stocks did Bard select?
We used the same approach with Bard as we did with ChatGPT. We asked Bard to create a stock portfolio consisting of the main investment strategies and approaches used by the top 10 managed funds in Australia.
Our criteria included high-quality businesses trading below their intrinsic values, high profit margins and a sustainable competitive advantage.
Following our prompts, it selected 19 stocks, mostly from the US and largely within the technology sectors.
- US equities: 68.4%
- UK/EU equities: 21%
- APAC: 10.5%
How did we select the top funds?
To put fund managers to the test, we took the 10 most popular actively managed listed funds on the ASX as our benchmark. Popularity was rated in terms of funds under management.
Although the most popular funds in Australia are passive index funds, we also excluded these from the list because these types of funds seek to simply mimic a market, rather than outperform it.
For a fair comparison, we only included funds that offer stock portfolios and excluded any single industry thematic funds.
Funds included in our top list were the Magellan Global Open Class Units fund (MGOC), Vanguard Global Value Equity Active ETF (VVLU) and BetaShares Australia Top20 Equity Yield Maximiser Fund (YMAX). While some of these funds did individually outperform each of our competitor portfolios, the average performance of all 10 funds did not.
- We asked Bard and ChatGPT to create an investment portfolio of 23 global stocks based on the main criteria used to create the top 10 managed funds.
- To mimic the top funds we asked for the portfolios to have the following criteria:
- Sustainable businesses trading below their intrinsic values
- A sustainable competitive advantage within their sector
- Management with a strong track record
- A history of reliable cash flow and earnings and projections for continued growth
- A history of reinvesting profits at high incremental rates of return
- Higher-than-average profit margins
- Primarily stocks from developed markets with at least a portion from Australia
- We used 23 as our target number of holdings because this was the median number of holdings by the 10 benchmark-managed funds, excluding any outliers
- For our Bard and ChatGPT portfolios, we assumed holdings were equally weighted
- We requested a small exposure to cash to mimic the cash levels held by the top funds
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