Performance and diversification often seem inseparable. Many portfolios rely on large-scale diversification to hedge risks and mirror market performance. However, over the past three years, ML10 has challenged this conventional wisdom with a highly selective approach, demonstrating that focus and precision can be just as effective as broad-based strategies.
What sets ML10 apart is its deliberate focus on just 10 well-diversified stocks, picked weekly. While this might seem overly restrictive, the portfolio’s performance over three years proves otherwise. ML10's ability to closely track the S&P 500 showcases the potential of leveraging AI to craft a small size direct equity portfolio that thrives in both bullish and bearish environments.
Y1 (6.1.2022-06.01.2023) was a challenging year for the market, with both ML10 and the S&P 500 posting negative returns. The portfolio’s return of -15.4% slightly outperformed the benchmark’s -18.9%, highlighting its resilience during a downturn. This performance underscores the strategic power of ML10’s sector allocation, which leaned heavily on Technology, Telecommunications, and Healthcare, while also including Energy to mitigate some market shocks.
Y2 (07.01.2023-05.01.2024) saw a strong recovery, with ML10 achieving an impressive return of 23.1%, exactly in line with the S&P 500’s 23.1%. The portfolio demonstrated its adaptability by shifting toward Energy and Healthcare, reflecting a pivot from its Technology-heavy positioning in 2022.
Y3 (06.01.2024-02.01.2025) marked another successful year for ML10, with a return of 25.9%, slightly exceeding the S&P 500’s 24.3%. What stood out this year was the portfolio’s balanced diversification across Technology, Healthcare, and Industrial sectors.
Over the past three years, we’ve continuously enhanced the underlying model. In the second year, we introduced sentiment analysis, and more recently, we incorporated factors. These advancements have consistently improved the model’s performance, enabling it to surpass the benchmark.
ML10’s selectivity and focus do not come at the cost of performance. Instead, the portfolio demonstrates that even within a restrictive framework of just 10 titles, it’s possible to achieve market-aligned results. This achievement is a testament to the power of AI-driven investment strategies, which enable precision in asset selection and sector allocation, while dynamically responding to shifting market conditions.
ML10’s sector diversification further highlights its strategic acumen. Over the three years, the portfolio evolved dynamically:
This adaptability reflects not just diversification, but strategic evolution—a quality that makes ML10 truly exceptional.
After three years of live performance, ML10 stands as a testament to the potential of AI-driven portfolio management. It proves that precision, rather than sheer volume, can deliver results, and that a highly selective portfolio can hold its ground against a diversified benchmark like the S&P 500.
In a world where markets are constantly evolving, ML10 shows that AI is not just a tool but a force multiplier, capable of distilling complex data into actionable investment strategies. For investors seeking market performance with focus, ML10 offers a compelling glimpse into the future of investing.