Quant Insight’s China AlphaIndex (KCAIQI) is beating the market.

Quant Insight is the creator of along only China Alpha index (KCAIQI). It targets a subset of China CSI300stocks in order to outperform the index.

KraneShares have licensed this index and launched the KCAI ETF late last year.

KCAIQI has outperformed the CSI300 TR index by ~5% YTD, yielding an information ratio of 1.2. This outperformance stems from both active sector weights and stock selection.Charts below

Advances in optimisation now allow machines to find regions of stable alpha in multi dimensional space. Inrelation to KCAIQI:

=> The index picks 30-60stocks - But when you look at how many potential portfolios there are of 30-60stocks from 300, with varying weights, there are about as many as there areatoms in the universe.

=> Not only that, you don’t want to find one high alpha portfolio sitting on its own.

=> You need an optimisation approach that can explore the whole alpha surface and find that plateau of stable alpha.

And then re-optimise every month to stay in the best portfolio regions.

Adaptive machines may have theedge, and this is only going to spread across the investing landscape.