Definitions: AI, ML, and why generative AI differs

This interview is brought to you by Pictet Asset Management. To learn more about Pictet AI-Enhanced  International Equity ETF ($PQNT), click here: https://etf.am.pictet.com/pqnt/

To learn more about Pictet AI Enhanced US Equity ETF ($PQUS), click here: https://etf.am.pictet.com/pqus/ 

Jack Farley sits down with David Wright, co-head of Quantitative Investments at Pictet Asset Management, to  discuss the machine learning techniques his team uses in their $30 billion quant franchise, and the degree to  which AI has impacted serious quantitative investing. Wright explains why he prefers to utilize many decision trees and use gradient boosting rather than Generative AI to generate return forecasts, citing the need to avoid  "hallucinations" and ensure models remain interpretable. The conversation explores their sophisticated  investment process, which analyzes over 400 features, including accounting data, market trends, and analyst  sentiment, to predict relative stock performance over 20-day horizons. These strategies, which now are included  in new ETFs $PQNT (Pictet AI Enhanced International Equity ETF) and $PQUS (Pictet AI Enhanced US Equity  ETF) are designed as "passive replacements," aiming to maintain a Beta of 1.0 while aiming to deliver an  additional 1–2% annual outperformance over the relevant benchmarks, S&P 500 and MSCI EAFE indices. Finally,  Wright addresses the common "black box" misconception of quantitative finance, advocating instead for a "crystal  box" approach that provides full transparency into the economic rationale behind every trade. Recorded April 21,  2026.

For important information about the fund, please click: https://etf.am.pictet.com/” 

Important Information 

Before investing, carefully consider the fund’s investment objectives, risks, charges, and expenses. This and  other information can be found in the fund’s prospectus or, if available, the summary prospectus, which  may be obtained by calling (855) 994-4778 or visiting www.pictet.com/etf. Read it carefully before investing.  (In Italic or Bold)  

Investing in Exchange Traded Funds (ETFs) involves risk, including possible loss of principal. The fund's principal  investment risks include Artificial Intelligence Models and Data Risk, Non-Diversification Risk, Convertible  Securities Risk, Rights and Warrants Risk, Real Estate Investment Trusts (REITs) Risk and Sustainability & ESG  Data Risk. For additional information about these and other fund risks, please refer to the "Principal Investment  Risks" section of the prospectus. 

ETFs are subject to additional risks that do not apply to conventional mutual funds, including the risks that the  market price of an ETF's shares may trade at a premium or discount to its net asset value, an active secondary  trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade,  which may impact an ETF's ability to sell its shares. Shares of any ETF are bought and sold at market price (not  NAV) and are not individually redeemed from the ETF. Brokerage commissions will reduce returns. 

Foreside fund services, LLC, distributor. 

Definitions of terms used in the interview: 

1. S&P 500 Index 

The Standard & Poor’s 500 Index (S&P 500) is a market-capitalization-weighted index of 500 leading publicly  traded companies in the United States. It is widely regarded as the best single gauge of large-cap U.S. equities.  Because it is weighted by market value, larger companies have a greater impact on the index's performance than  smaller ones. 

2. MSCI EAFE Index 

The MSCI EAFE Index is a stock market index that tracks the performance of large- and mid-cap securities  across developed markets around the world, excluding the U.S. and Canada. The acronym stands for Europe,  Australasia, and the Far East. It is commonly used as a benchmark for international equity funds.

3. Alpha 

Alpha represents the "excess return" of an investment relative to the return of a benchmark index. It is a measure  of performance on a risk-adjusted basis. "Positive Alpha: indicates the investment outperformed its benchmark  after accounting for risk and "Negative Alpha" indicates the investment underperformed relative to the  benchmark. 

4. Beta 

Beta measures the volatility—or systematic risk—of a security or portfolio in comparison to the market as a whole  (usually the S&P 500, which has a Beta of 1.0) A Beta > 1.0 indicates the investment is more volatile than the  market (e.g., if the market rises 10%, the investment might rise 12%) A Beta < 1.0 indicates the investment is less  volatile than the market (e.g., if the market falls 10%, the investment might only fall 8%). 

5. Basis Points (bps) 

A Basis Point is a standard unit of measure for interest rates and other percentages in finance. One basis point is  equal to 1/100th of 1%, or 0.01%.