AI ETFs – the content:
Artificial Intelligence (AI) is one of the most disruptive and transformative technologies of our time. With the ability to learn from data, AI has the potential to revolutionize industries and change the way we live our lives. As a result, investors are increasingly interested in AI-focused exchange-traded funds (ETFs) as a way to gain exposure to this emerging market. In this blog post, we will explore the different AI ETFs available, their investment strategies, and their performance.
Understanding ETFs
Before diving into the specifics of AI ETFs, it’s important to have a basic understanding of what ETFs are. ETFs are investment funds that are traded on stock exchanges, much like individual stocks. They are designed to track the performance of a particular index, such as the S&P 500, or to invest in a particular sector or asset class, such as AI. ETFs offer investors a low-cost, diversified way to invest in a particular market without having to buy individual stocks.
There are two main types of ETFs: passive and active. Passive ETFs track an index and aim to replicate its performance. Active ETFs, on the other hand, are managed by fund managers who make investment decisions based on their analysis of the market.
AI ETFs can be either passive or active, and they offer investors exposure to companies that are involved in the development and use of AI technologies.
Passive AI ETFs
Passive AI ETFs are designed to track the performance of an index that includes companies involved in AI. The most popular passive AI ETF is the Global X Robotics & Artificial Intelligence ETF (BOTZ). BOTZ tracks the Indxx Global Robotics & Artificial Intelligence Thematic Index, which includes companies involved in robotics, automation, and AI. Some of the top holdings in BOTZ include Nvidia, Intuitive Surgical, and Keyence Corporation.
Another passive AI ETF is the iShares Robotics and Artificial Intelligence ETF (IRBO). IRBO tracks the NYSE FactSet Global Robotics and Artificial Intelligence Index, which includes companies involved in robotics, automation, and AI. Some of the top holdings in IRBO include Fanuc, ABB, and Yaskawa Electric.
Passive AI ETFs offer investors a low-cost way to gain exposure to the AI market. However, they may not outperform the broader market, and their performance is tied to the performance of the index they track.
Active AI ETFs
Active AI ETFs are managed by fund managers who make investment decisions based on their analysis of the market. The most popular active AI ETF is the ARK Autonomous Technology & Robotics ETF (ARKQ). ARKQ invests in companies involved in the development and use of autonomous technology and robotics, including AI. Some of the top holdings in ARKQ include Tesla, Amazon, and Baidu.
Another active AI ETF is the Global X Future Analytics Tech ETF (AIQ). AIQ invests in companies involved in the development and use of AI and other analytics technologies. Some of the top holdings in AIQ include Alphabet, Facebook, and Adobe.
Active AI ETFs offer investors the potential for higher returns than passive ETFs, but they also come with higher fees. Additionally, their performance is tied to the fund manager’s investment decisions, which may not always be successful.
AI ETF Performance
AI ETFs have performed well in recent years, driven by the growth of the AI market. According to ETF.com, the
- Global X Robotics & Artificial Intelligence ETF (BOTZ) had a total return of 155.84% from its inception in September 2016 to May 2021.
- The iShares Robotics and Artificial Intelligence ETF (IRBO) had a total return of 116.14% from its inception in June 2018 to May 2021.
- The ARK Autonomous Technology & Robotics ETF (ARKQ) had a total return of 341.34% from its inception in September 2014 to May 2021.
- The Global X Future Analytics Tech ETF (AIQ) had a total return of 52.23% from its inception in April 2019 to May 2021.
Risks of Investing
As with any investment, investing in AI ETFs comes with risks. One of the main risks is that the AI market is still in its early stages, and there is a lot of uncertainty about how it will develop. Additionally, AI is a rapidly changing field, and companies that are leaders in the industry today may not be leaders in the future.
Another risk is that the performance of AI ETFs is tied to the performance of the companies they invest in. If the companies in the ETFs underperform, the ETFs will also underperform.
Investors should carefully consider these risks before investing in AI ETFs.
Investing in AI ETFs
Investing in AI ETFs can be done through a brokerage account. Investors can buy and sell shares of the ETFs just like they would individual stocks. It’s important to do research on the different AI ETFs available and understand their investment strategies before investing.
Investors should also consider their investment goals and risk tolerance before investing in AI ETFs. While the potential for high returns may be attractive, investing in AI ETFs comes with risks, and investors should only invest what they can afford to lose.
Future of AI ETFs
The future of AI ETFs looks promising, as the AI market is expected to continue to grow in the coming years. According to a report by ResearchAndMarkets, the global AI market is expected to grow from $10.1 billion in 2018 to $309.6 billion by 2026.
As the AI market grows, we can expect to see more AI ETFs launched, offering investors even more options for gaining exposure to this emerging market.
Conclusion
AI ETFs offer investors a way to gain exposure to the growing AI market. Passive and active AI ETFs are available, each with its own investment strategy and performance. While investing in AI ETFs comes with risks, the potential for high returns may be attractive to some investors. As the AI market continues to grow, we can expect to see more AI ETFs launched, offering investors even more options for gaining exposure to this emerging market.
Disclaimer
This blog post is for informational purposes only and should not be considered investment advice. Investing in AI ETFs comes with risks, and investors should carefully consider their investment goals and risk tolerance before investing.
Link for more information
Justetf.com is a leading European portal for building wealth with ETFs. It provides a range of services to help investors construct their portfolios, including a search engine for ETFs, investment guides, and a calculator for ETF investment plans. The site also offers a comparison of online brokers and their ETF offerings. Justetf.com collaborates with Scalable Capital and Directa to make trading even easier.