what-are-artificial-intelligence-etfs

What are Artificial Intelligence ETFs? All you need to know

Artificial intelligence will prove to be one of the important investment trends in the coming years. But let’s be clear: artificial intelligence is already here. 

According to Grand View Research, a business consulting organization, the worldwide artificial intelligence market was worth $39.9 billion in 2019. 

Over the last year, artificial intelligence equities like Amazon.com (AMZN), Tesla (TSLA), and Nvidia (NVDA) have been market darlings, outperforming the overall market several times.

With ETFs in action, most Artificial Intelligence ETFs are seeing at least a doubling in market value since last year. 

What are Artificial Intelligence ETFs (AI ETFs)? 

Artificial Intelligence ETFs are exchange-traded funds that invest in equities of artificial intelligence firms, such as robotics, navigational systems, automated machines, 3D printing, natural language processing, social media and vehicles. 

AI ETFs may invest entirely in AI stocks or incorporate other technology-related stocks in their portfolios.

what is Artificial Intelligence ETFs
Source: Pexels

ETFs that invest in artificial intelligence must satisfy at least one of these three criteria

1. They are funds that invest in firms developing new products or services, making technological advancements in a scientific study relating to artificial intelligence, or both. 

2. These are funds with at least 25% of their portfolio invested in companies that spend a lot of money on artificial intelligence research and development. Amazon, Tesla Motors, Apple, and Alphabet are examples of such businesses. 

3. Funds that choose specific assets for selection in the fund using artificial intelligence approaches. 

How to invest in the Artificial Intelligence ETFs? 

AI ETFs are, arguably, the finest method to invest in AI technology – because, like with other specialized sectors still in the early phases of the growth cycle, picking specific companies that will dominate the industry is intrinsically difficult and risky. 

When you buy in an AI ETF, you’ll often gain exposure to numerous stocks, lowering your total market risk by diversifying your holdings. 

Artificial Intelligence ETFs have $8.56 billion in assets under management, with 35 ETFs trading on US exchanges. The cost-to-income ratio is 0.68 per cent on average.

With $1.96 billion in assets, the Global X Robotics & Artificial Intelligence ETFs BOTZ is the largest Artificial Intelligence ETF. IECS, the best-performing Artificial Intelligence ETF in the previous year, returned 16.25 per cent.  

The Advisor Shares Let Bob AI-Powered Momentum ETF LETB was the most recent ETF to come into the market in the Artificial Intelligence area on 02/08/22. 

Let’s look at some top AI ETFs with respect to % change and AUM 

Top ETF Performers according to etf.com

TickerFund NameTrailing 30-days price TR change
DUDEMerlyn.AI SectorSurfer Momentum ETF3.24%
WIZMerlyn.AI Bull-Rider Bear-Fighter ETF3.18%
BOBMerlyn.AI Best-of-Breed Core Momentum ETF1.68%
SNUGMerlyn.AI Tactical Growth and Income ETF1.56%
ARKQARK Autonomous Technology & Robotics ETF0.31%

Top ETF Performers in terms of AUM according to etf.com

TickerFund NameTrailing 30-days price AUM change
LETBAdvisorShares Let Bob AI-Powered Momentum ETF3,390.76%
DUDEMerlyn.AI SectorSurfer Momentum ETF18.37%
BOBMerlyn.AI Best-of-Breed Core Momentum ETF16.19%
WIZMerlyn.AI Bull-Rider Bear-Fighter ETF15.31%
NVQQRAFT AI-Enhanced U.S. Next Value ETF11.85%

The bottom line on AI ETFs is that robots, automation, and artificial intelligence have the potential to grow in demand in the future. 

As a result, AI equities and AI ETFs have substantial growth potential, while the market risk is often more significant than the more diversified investments. 

Investors should exercise caution when adding minorly targeted sector funds to a portfolio, such as AI ETFs.

Consult our Expert ETFs advisor to get the right plan for you

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