As the year unfolds, it’s clear that the focal point of investment interest is shifting towards artificial intelligence (AI). This surge in attention is well-justified, considering the remarkable advancements witnessed over the past year, prominently showcased by innovations such as OpenAI’s ChatGPT. The continuous expansion of AI’s influence presents investors with an enticing opportunity to capitalize on its potential.
Christopher Gannatti, the global head of research at WisdomTree, emphasizes that the growing buzz around AI is impossible to ignore. The technology’s capacity to reshape various facets of our lives, work, and investment landscape, especially with the emergence of ChatGPT, is indeed remarkable.
Major players in the technology sector are enthusiastically embracing the AI trend, altering their strategies to prioritize seamless integration. According to FactSet, during the first quarter of 2023, 110 companies in the S&P 500 referred to “AI” in their earnings calls, with tech sector firms taking the lead.
However, navigating the realm of AI investments can be daunting. Given the vastness of the AI landscape, with numerous companies and a multitude of technologies, the question arises: How can an investor tap into the overarching growth potential of this theme without succumbing to complexity or undue risk?
The solution lies in thematic exchange-traded funds (ETFs) that provide targeted, specialized exposure to a selection of AI-related stocks. To facilitate investors in identifying the most promising AI ETFs available, we’ve assessed six thematic ETFs based on factors like assets under management (AUM), expense ratios, underlying index, and investment strategy.
Exploring the Top AI ETFs
- Global X Robotics & Artificial Intelligence ETF (BOTZ): With a net expense ratio of 0.69% and an AUM of $2.4 billion, BOTZ offers a comprehensive perspective on AI investment prospects.
- iShares Robotics and Artificial Intelligence Multisector ETF (IRBO): IRBO boasts a net expense ratio of 0.47% and an AUM of $495 million, positioning itself as a compelling option for investors.
- Global X Artificial Intelligence & Technology ETF (AIQ): AIQ presents a net expense ratio of 0.68% and an AUM of $510 million, solidifying its stature in the AI investment landscape.
- First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT): ROBT showcases a net expense ratio of 0.65% and an AUM of $426 million, making it a contender in the AI ETF space.
- WisdomTree Artificial Intelligence and Innovation Fund (WTAI): WTAI, with a net expense ratio of 0.45% and an AUM of $159 million, offers a unique avenue for AI-focused investments.
- Roundhill Generative AI & Technology ETF (CHAT): With a net expense ratio of 0.75% and an AUM of $89 million, CHAT adds diversity to the AI ETF options.
Selecting the Top AI ETF
When assessing the AI ETFs, we implemented rigorous criteria to ensure a reliable ranking. ETFs were excluded if they didn’t provide a significant focus on pure-play AI exposure. Furthermore, ETFs using AI for investment decisions were omitted, as were those with short-term focuses, such as inverse and leveraged exposure funds.
To secure a spot in our rankings, AI ETFs had to meet minimum AUM requirements and adhere to capped expense ratios. These factors contribute to the ETF’s long-term viability and cost-effectiveness, ultimately benefiting investors.
Understanding AI and Its Potential
Artificial Intelligence (AI) is the fusion of computer science and robust datasets to facilitate problem-solving. Essentially, AI involves enabling computers to learn and think akin to humans. Machines learn from experiences and leverage that knowledge to make informed decisions. This self-correction ability allows computers to operate independently and efficiently, exemplified by AI chatbots like ChatGPT, which learn from data, adapt, and excel at complex tasks.
Exploring Diverse AI Investment Paths
Beyond AI ETFs, there are various avenues for investing in AI. These include direct investments in AI-focused companies, mutual funds emphasizing AI, and venture capital funds targeting AI startups. Additionally, equity crowdfunding platforms offer opportunities for smaller investors to participate in early-stage AI funding rounds. These avenues collectively underscore the ever-expanding landscape of AI investment opportunities.
