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AI (Artificial Intelligence) has emerged as a dominant trend worldwide, leveraging computer science to develop machines replicate human behavior. AI now powers everything from personalized Netflix menus to online shopping and popular smartphone applications. Consequently, the growing demand for AI adoption has created a massive market for companies in this sector. The recent multi-billion dollar collaboration between Microsoft Corp and OpenAI, the creators of ChatGPT, highlights the potential for further growth in this industry.
Shareholders seeking exposure to the AI sector can consider AI ETFs (Artificial Intelligence ETFs), which offer a diversified range of AI companies. These ETFs can be traded on the stock market like securities and mutual funds, providing a fixed income while minimizing exposure to the volatility of the AI sector.
In this article, we have compiled a list of the best AI ETFs available for investors to consider for their portfolios. Our selection criteria include past performance, dividends, management fees, expense ratios, technical indicators, and other relevant factors. As the AI market continues to expand, investing in AI ETFs may offer significant potential for growth and returns, providing shareholders with a fixed income stream that is insulated from market fluctuations.
Best AI ETFs to Buy In 2023
Top 10 Best AI ETFs (Artificial Intelligence ETFs) to Buy In 2023
- Best AI ETFs to Buy In 2023
- Global X Robotics and Artificial Intelligence ETF
- SPDR S&P Kensho New Economies Composite ETF
- iShares Exponential Technologies ETF (XT)
- IShares Robotics And Artificial Intelligence ETF
- First Trust Nasdaq Artificial Intelligence and Robotics ETF
- iShares Automation and Robotics UCITS ETF
- ARK Autonomous Technology & Robotics ETF
- ROBO Global Robotics and Automation Index ETF
- L&G Artificial Intelligence UCITS ETF
- Vanguard Information Technology ETF
- The advantages of AI-based ETFs include the following:
Global X Robotics and Artificial Intelligence ETF
Launched in 2016 by Mirae Asset Management, this ETF aims to capitalize on the increasing adoption and utilization of robotics and artificial intelligence. Its investment strategy typically targets companies in the global robotics industry, including those in industrial robotics, automation, and autonomous vehicles. According to its fund managers, the declining cost of industrial robotics is expected to drive greater adoption and scalability for these technologies among businesses in the future.
Its AUM (assets under management) is $1.65 billion, and the NAV stands at $24.69. Despite underperforming in the past year, this ETF has made promising investments that could make it an attractive option. Moreover, its total expense ratio of 0.68%, while relatively high for an ETF, is reasonable given its historical performance.
SPDR S&P Kensho New Economies Composite ETF
The SPDR S&P Kensho New Economies Composite ETF comprises several Kensho new economies sub-indexes, providing investors with exposure to equities in industries related to advanced new economy technologies. These industries include vehicle automation, robotics, 3D printing, nanotechnology, exponential processing power, and AI.
With approximately 561 holdings, including Teledyne Technologies and Bruker, this ETF currently tracks indexes with a market capitalization of up to $1.69 billion and offers a substantial dividend yield of 1.42%. Additionally, its net expense ratio is a mere 0.20%.
The iShares Exponential ETF is classified as a large-cap fund and is designed to track the Morningstar Exponential Technologies Index, which focuses on global stocks associated with advancing exponential technologies that have the potential to cause significant industry disruption, including AI. Information technology stocks comprise over 50% of the fund’s portfolio, while the remainder is divided between the healthcare and industrial sectors.
With net assets of approximately $3.3 billion, this ETF has an annual dividend yield of almost 0.70%. While its expense ratio of 0.46% is relatively high, the fund’s potential justifies this cost.
Introduced in 2018, the iShares Robotics and Artificial Intelligence ETF is a relatively new fund that tracks the performance of an index comprising 114 firms from developed and emerging markets, making it well-positioned to benefit from the long-term optimistic view of the robotics technology and AI sectors.
Categorized as a small-cap fund, this ETF currently has a net asset value (NAV) of $30.28 and oversees $273 million in assets.
First Trust Nasdaq Artificial Intelligence and Robotics ETF
The First Trust Nasdaq Artificial Intelligence and Robotics ETF tracks the Nasdaq CTA Artificial and Robotics Index, which comprises businesses from the technology, industrial, and other sectors involved in artificial intelligence and robotics.
With over 60% of its portfolio invested in tech stocks, this ETF performed exceptionally well during the pandemic. As of now, it owns close to 110 stocks, with the top 5 being C3.ai (AI 4.2%), Atos (AEXAF 2.8%), Pegasystems (Nasdaq: PEGA), ANSYS (Nasdaq: ANSS), and Luminar Technologies (Nasdaq: LAZR). Also, it offers an expense ratio of 0.65% and a dividend yield of 0.86%, respectively.
The iShares Automation and Robotics UCITS ETF is a product of BlackRock, designed to invest in companies involved in robotics and automation. It focuses on businesses that have the potential to generate significant revenue from these sectors and tracks the performance of the STOXX Global Automation and Robotics Index.
This fund is valued at $2.9 billion and is eligible for UCITS, SIPP, and ISA. It has an expense ratio of 0.40%, and its top 10 holdings include Lattice Semiconductor Corp, Rockwell Automation, Amertek Inc, Novanta, and Lincoln Electric Holdings.
ARK Autonomous Technology & Robotics ETF
The ARK Autonomous Technology & Robotics ETF concentrates on innovations in autonomous vehicles, 3D printing, robotics, and energy storage technology that enhance efficiency and reduce costs. The fund managers anticipate profiting from the emergence of novel products or services, scientific breakthroughs, and technical advancements in domains such as energy, manufacturing, transportation, materials, and automation.
It monitors 39 holdings, with Tesla and Trimble among its most significant positions. While it has surged by roughly 21% year-to-date, its expense ratio is 0.75%.
ROBO Global Robotics and Automation Index ETF
The ROBO Global Robotics and Automation Index ETF, one of the earliest AI ETFs in the US, comprises around 80 holdings and follows its eponymous index. This fund primarily invests in companies recognized for their AI, robotics, and healthcare technology expertise and manages assets worth $1.1 billion.
Nevertheless, this ETF has a higher expense ratio of 0.95% compared to similar funds. Moreover, due to the technology sector’s lackluster performance over the past year, its current performance has not been as impressive.
L&G Artificial Intelligence UCITS ETF
The investment approach of this fund is based on the ROBO Global Artificial Intelligence Index. The firm is convinced that AI is a permanent and transformative technology that will revolutionize personal and professional lives. With net assets of $273 million, this small-cap fund’s investment strategy is backed by a group of AI technology specialists and is UCITS compliant. It is worth noting that the top 10 holdings of this fund constitute 81% of its portfolio, with companies such as Alteryx, Alibaba, Atlassian, Rapid7, and others.
Vanguard Information Technology ETF
The Vanguard Information Technology ETF focuses exclusively on the technology sector and does not include healthcare or other industries. It also excludes companies such as Google, Facebook, and Netflix, as well as the telecom industry. The ETF’s holdings are limited to large-cap tech companies such as Apple, Microsoft, NVIDIA, Adobe, and Intel, resulting in lower volatility than other ETFs.
In conclusion, the advent of AI has revolutionized how investors approach the world of ETFs. With the emergence of AI-powered ETFs, investors can now access various investment strategies previously available only through mutual funds or index-fund structures. These ETFs offer investors diversification, allocation, and liquidity benefits, which are crucial in today’s volatile market environment.
The advantages of AI-based ETFs include the following:
- The elimination of the need for active management.
- The reduction of capital gains.
- The potential to outperform traditional index-based ETFs.
Additionally, smart beta ETFs have become increasingly popular as they combine indexing benefits with active management techniques. These ETFs have proven more effective at capturing market returns and minimizing volatility. While AI-based ETFs have some drawbacks, such as their reliance on algorithms and the possibility of systematic errors, they offer investors a unique opportunity to gain exposure to a rapidly growing asset class. As with any investment, it is essential to conduct due diligence and choose the right ETFs for one’s investment goals. Finally, investors should work with a reputable brokerage or fund manager to execute trades and manage their investment portfolio effectively.
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