JPMorgan Chase is using OpenAI’s GPT-4 model for a range of thematic investment baskets, according to Bloomberg.
Dubbed IndexGPT, the tool identifies keywords associated with a theme before putting them into a natural language processing model that scans news articles to identify companies involved in the area.
Thematic indexes identify potential investments based on trends such as the rise of robotics or e-sports. They became popular with retail investors in around 2020 but have since seen their star wane thanks to poor performance, says Bloomberg.
IndexGPT is aimed at institutional clients and generates twice as many keywords than the software used for previous funds, which means a "superior representation of the theme," says Rui Fernandes, head, markets trading structuring, JPMorgan.
“It’s about being able to select a broader range of stocks that are not necessarily the obvious companies that everyone already knows about,” he tells Bloomberg.