Nasdaq has been appointed the thematic data provider for two DWS ETFs – including its artificial intelligence strategy – after its former partner Yewno. Inc was forced into liquidation earlier this year.
In a shareholder notice, DWS said Nasdaq will take over the role of data provider for the Xtrackers Artificial Intelligence & Big Data UCITS ETF (XAIX) and the Xtrackers Future Mobility UCITS ETF (XMOV), backed by its artificial intelligence team of data scientists and software engineers.
The index provider took on the role on 14 June, meaning it provided the data for the ETF's rebalance on 21 July.
While DWS said the index methodologies would not change because of the move, Nasdaq uses a different model for processing patents meaning “some differences may arise” in stock selection and weighting.
“Nasdaq’s model for processing the patents and the machine learning-based algorithm assessing the thematic data has been built using different parameters, as Yewno’s model was proprietary and could not be replicated exactly,” it said.
“Therefore, some differences may arise in the constituents selected and the weighting of constituents.”
DWS added the ETFs would continue its objective of selecting innovative companies based on rolling one-year patent data.
Nasdaq, which administers the two ETFs indices, had partnered with Yewno Inc. to provide the proprietary theme and sub-theme classifications used for reviewing exposure to innovative technologies.
The data was then used to construct each reference index for the two ETFs which launched in January 2019.
However, last September Yewno Inc. filed for a ‘general assignment’, a process that enables it to liquidate all its assets without filing for bankruptcy, after it said it was unable to pay its debts in full.
Despite this, DWS said Nasdaq was able to work with the assignee of Yewno Inc.’s assets, Yewno LLC, and former Yewno Inc. employees to ensure the semi-annual rebalance was able to take place on 20 January.
The two indices track stocks from large, mid and small-cap stocks from across the investment universe with individual securities capped at 4.5%.
Both XAIX and XMOV have ridden the AI wave in the stock market so far this year, returning 47.2% and 32.9%, respectively.
XAIX has also captured considerable flows with assets under management of £782m versus £450m six months ago.
