Australia’s top investment funds vs ChatGPT and Bard

We compared the performance of Australia's top investment funds against AI-designed portfolios.

Kylie Purcell's headshot
Alex Jeffs's headshot

By

Kylie Purcell

&

Alex Jeffs

Edited by

Jason Loewenthal

Updated

Fact checked

Quick overview

  • 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.

Important: Our test only looks at performance across a relatively short period of time. The performance of any one fund, portfolio or index during this time might not reflect its performance over the long term. Past performance is also no guarantee of future results.

Methodology

  • 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
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.

Sources

Jason Loewenthal's headshot
To make sure you get accurate and helpful information, this guide has been edited by Jason Loewenthal as part of our fact-checking process.
Kylie Purcell's headshot
Written by

Investments Analyst

Kylie Purcell is an experienced investments analyst and finance journalist with over a decade of expertise in a wide range of financial products, including online trading platforms, robo-advisors, stocks, ETFs and cryptocurrencies. She is a sought-after commentator and regularly shares her insights on the AFR, Yahoo Finance, The Motley Fool, SBS and News.com.au. Kylie hosts the Investment Finder video series and actively contributes to the investment community as a judge and panellist. She holds a Master of Arts in International Journalism, a Graduate Diploma in Economics, and ASIC-recognised certifications in securities and managed investments. See full bio

Kylie's expertise
Kylie has written 202 Finder guides across topics including:
  • Investment strategies
  • Financial platforms
  • Stockbrokers
  • Robo advisors
  • Exchange traded funds (ETFs)
  • Ethical investing
  • ASX stocks
  • Stock and forex markets
Alex Jeffs's headshot
Co-written by

Publisher

Alex Jeffs is the senior publisher for automotive content at Finder. He has tested vehicles everywhere from Tasmania to Oodnadatta. See full bio

Alex's expertise
Alex has written 51 Finder guides across topics including:
  • Automotive industry
  • Car finance
  • Car insurance
  • Personal finance

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2 Responses

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    PaulMarch 10, 2024

    I want to invest $50 ea in four stocks what is the best way to go about it?

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