How does SPXU work? Here's why it can be a great addition to your portfolio.
Holding SPXU is equivalent to shorting the S&P 500 Index with leverage. SPXU aims to generate returns from declines in the S&P 500 by providing three times (3x) inverse exposure to its daily performance. However, SPXU is subject to volatility decay, which means it's not ideal for long-term holding. At alphaAI, we utilize SPXU to help hedge your portfolio against and, in some instances, profit from short-term market downturns.
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How Does SPXU Work? 4 Key Characteristics
SPXU is not suitable as a long-term investment. At alphaAI, we use SPXU to help hedge your portfolio against and, in some cases, profit from short-term market pullbacks in the S&P 500.
Inverse Performance
If the S&P 500 falls by 1% on the day, SPXU is designed to rise by 3%. With alphaAI you can automatically take advantage of this inverse relationship to strategically hedge your portfolio in weak market conditions.
Daily Resets
SPXU resets its leverage daily, aiming to provide three times the inverse of the S&P 500's daily performance. This daily reset means long-term returns may differ significantly from the fund's stated objective. Our model is designed to account for this characteristic.
High Risk and Volatility
Due to its leveraged and inverse nature, SPXU is highly volatile and carries a higher level of risk compared to non-leveraged funds. At alphaAI, we strategically use SPXU in small amounts to help manage your portfolio's risk exposure during market downturns.
Best for Short-Term Hedging
Due to the effects of daily compounding and potential volatility drag, SPXU is most suitable for short-term trading or hedging. At alphaAI, we use SPXU to help hedge your portfolio against and, in some cases, profit from short-term market pullbacks in the S&P 500.
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You Can Trade SPXU With alphaAI in 3 Steps
We create a strategy that fits your risk appetite and unique investment profile, aiming to keep your portfolio's risk levels within your expected range. We use SPXU to help hedge your portfolio against, and sometimes profit from, market declines. Here's how it works:
Tell Us About Your Investment Preferences: Answer a few easy questions to help us understand your risk appetite and determine your investor profile.
An Investment Strategy Built For You: Based on your investor profile, we create a personalized strategy just for you. Your strategy may strategically use SPXU to help hedge the downside.
Automate Your Portfolio: Our technology is designed to handle everything for you. By analyzing current market conditions, our platform will understand when to allocate some of your holdings to SPXU, and when not to.
Frequently Asked Questions
Find answers to common questions about alphaAI.
How does alphaAI use AI?
We use AI to automate the entire investment process, from beginning to end.
At the heart of our proprietary, industry-leading AI system is a set of predictive machine learning models. Our models have been trained on multiple decades of data encompassing more than 10,000 global stocks. On average, each model is trained on more than 10 billion data points. Each model is trained to perform a unique predictive capability, and multiple models work together to make trading decisions.
Our portfolio management system uses a rules-based approach to decide what to do with the predictions that our models generate. This includes making trades and managing risk according to your unique investor profile. This system also includes numerous failsafe protocols to ensure that all actions taken are within strictly defined parameters.
Read more about our technology.
Is it safe to let AI handle my money?
Yes, absolutely! There is a 0% chance that our AI technology will take unexpected actions – let us explain why.
At its core, AI is simply machine learning (ML). ML is a branch of mathematics focused on the development of models that can learn patterns from data.
We use a variety of predictive machine learning models combined with a rules-based approach to make trades and manage risk according to your unique investor profile. Our systems include numerous failsafe protocols to ensure that all actions taken are within strictly defined parameters.
Hopefully, you now have a better understanding of what AI is and how we use it. So don't worry – AI doesn’t have sentience, and there is no chance of it going off and making its own decisions. AI is another word for machine learning, and machine learning simply consists of a collection of predictive methods and models that can learn patterns from data.
Are there any hidden fees? What’s the actual price?
At alphaAI, we don’t believe in the traditional management fee model. Why should your costs go up as your assets increase?
We charge a single, flat subscription fee. This is the only way we make money. We do not charge account opening fees, minimum account fees, withdrawal fees, or account closing fees.
At alphaAI, our mission is to make sophisticated investment strategies accessible to everyone! We pride ourselves in our affordable and transparent pricing.
What is the minimum account size?
Get started with as little as $100!
How is alphaAI different from other roboadvisors?
alphaAI is the only roboadvisor that adjusts your portfolio to the markets in real-time. Other roboadvisors use a purely passive investment approach, which leaves you unable to take advantage of market trends.
At alphaAI, we use responsive investment strategies to manage your risk. This means that when the markets are volatile or uncertain, we automatically reduce your risk to help minimize portfolio volatility.
Read more about the alphaAI difference.
What is alphaAI’s investment philosophy? How do you control risk and drawdowns?
Our goal is simple: deliver better risk-adjusted returns than the market. We do this by focusing on automated, high-upside strategies that primarily invest in leveraged ETFs, such as TQQQ and UPRO.
Our AI system adjusts your strategy to your unique investor profile and risk tolerance. We adapt your portfolio’s risk level to the markets in real-time, helping keep your portfolio’s volatility and drawdowns within your defined acceptable range. We control risk in two key ways: market exposure management and tactical asset allocation. The result: better returns for the amount of risk taken on.
Read more about our investment philosophy here.
Why does alphaAI focus on leveraged ETFs? Aren’t they highly risky?
We focus on leveraged ETFs because of their potential for significant returns. For example, TQQQ has returned an average of 41% per year since its inception. Those are the kinds of numbers that excite us, and you are the ideal client if that also excites you.
However, higher potential returns also mean higher potential losses. That is why our primary focus is on risk management. We use automated market exposure management and tactical asset allocation to ensure your portfolio’s risk matches your investor profile and risk tolerance.
For reference, the S&P 500 has an annual average volatility of 20% — think of volatility as a measure of risk. With our tech, you can specify the level of risk you’re comfortable with — whether it’s less, more, or the same as the S&P 500 — and our AI system will handle the rest.
How hands-on or off is alphaAI?
alphaAI is completely hands-off – set it and forget it!
All you have to do is set your investor profile and customize your strategies. After that, we take care of everything for you. We automatically make trades and manage your portfolio’s risk in response to market conditions. Our leading-edge AI system stays on top of the market so you don’t have to. Rest easy knowing that regardless of what the market does, we are responding in the best way for you and your financial goals.
Read more about how the alphaAI process works.
What assets can I invest in through alphaAI?
Our strategies are optimized for ETFs, including leveraged and inverse ETFs. We will be adding additional asset classes in the future.
