Pacer ETFs has launched two new artificial intelligence (AI)-driven ETFs aimed at helping investors identify stocks with the strongest projected excess return potential using machine learning models.
The new funds — the Pacer S&P 500 3AI Top 100 ETF (BATS:PSAI) and Pacer S&P World 3AI Top 300 ETF (BATS:WDAI) — track newly developed S&P 3AI indices built in collaboration with 3AI and S&P Dow Jones Indices.
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The ETFs arrive as investor demand for AI-powered investing tools continues to grow beyond traditional passive index strategies and factor-based products. PSAI focuses on 100 companies from the S&P 500 with the highest AI-generated alpha forecasts, while WDAI expands the strategy globally by selecting 300 stocks from developed markets within the S&P World Index.
The indices use proprietary 3AI Alpha Intelligence Scores that analyze company fundamentals, market trends and macroeconomic signals to forecast potential 12-month outperformance.
Key features of the new ETFs:
- PSAI selects 100 U.S. large-cap stocks from the S&P 500 using AI-generated excess return forecasts.
- WDAI provides global developed-market exposure through 300 stocks from the S&P World Index.
- The underlying models analyze fundamentals, market data and macroeconomic indicators using machine learning.
- Index construction includes sector caps, security limits, human oversight and periodic rebalancing.
- The strategies are designed to complement both active and passive equity allocations through a rules-based framework.
Sean O'Hara, president of Pacer ETF Distributors, said investors are increasingly seeking return opportunities beyond "traditional beta and static factor strategies." He added that combining S&P DJI's indexing framework with AI-generated forecasts could offer a differentiated approach to portfolio construction.
Rupert Watts, head of Factors and Dividends at S&P Dow Jones Indices, described the benchmarks as "AI-enhanced" indices designed to identify companies with the highest expected excess returns while maintaining transparency and governance standards.
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