Artificial intelligence (AI) technology can sometimes make mistakes, like getting facts wrong about things like space pictures and men’s health. This made people pay a lot of attention to AI chatbots like OpenAI’s ChatGPT and Google’s Bard in February.
Even though AI programs have these problems and might not be ready to replace human journalists yet, the AI field is still set to change and grow. In January, Microsoft Corp. extended its big partnership with OpenAI.
There are special investments called exchange-traded funds (ETFs) that focus on AI. Three of the best ones are iShares Exponential Technologies ETF, Defiance Machine Learning & Quantum Computing ETF, and ROBO Global Robotics & Automation Index ETF. These ETFs are like baskets of different AI-related stocks. The AI industry is expected to grow a lot, maybe up to $1.6 trillion by 2030.
| ETF Name | Expense Ratio | Annual Dividend Yield | Assets Under Management | Inception Date | Issuer | Top Holdings |
|---|---|---|---|---|---|---|
| XT | 0.46% | 0.70% | $3.3 billion | March 19, 2015 | BlackRock Financial | SoFi Technologies, Coinbase Global, Meta Platforms |
| QTUM | 0.40% | 0.45% | $112.2 million | Sept. 4, 2018 | Defiance ETFs | Cirrus Logic, Baidu, Alteryx |
| ROBO | 0.95% | 0.17% | $1.4 billion | Oct. 22, 2013 | Exchange Traded Concepts | Harmonic Drive Systems, IPG Photonics, Zebra Technologies |
Some Important Points
- Mistakes made by AI have made people doubt how well AI can work in journalism.
- AI investments did not do as well as the bigger market in the past year.
- The best AI ETFs are iShares Exponential Technologies, Defiance Machine Learning & Quantum Computing, and ROBO Global Robotics & Automation Index.
- These ETFs have big investments in companies like SoFi Techologies Inc., Cirrus Logic Inc., and Harmonic Drive Systems Inc.
- There are about eight different ETFs focused on AI in the U.S.
- The AI industry did not do as well as other markets in the past year.
Note: Some ETFs use AI to choose stocks and are also called AI ETFs, but this story is about ETFs that invest in AI companies in different industries like robotics, automation, health care, and cars.
What you'll learn:
1️⃣ iShares Exponential Technologies ETF (XT)
- Performance in the Last Year: -8.4%
- Cost to Investors (Expense Ratio): 0.46%
- Yearly Earnings from Investments (Annual Dividend Yield): 0.70%
- Average Daily Trading Volume in the Last Three Months: 175,087
- Total Value of Investments Managed (Assets Under Management): $3.3 billion
- Starting Date: March 19, 2015
- Issuer: BlackRock Financial Management
XT is a big fund that focuses on companies related to the Morningstar Exponential Technologies Index. It chooses companies from around the world that are using technologies that can change industries really quickly, like AI. More than half of its investments, almost 53%, are in information technology stocks. It also invests in healthcare and industrial companies.
Some of the top investments in XT include shares of SoFi Technologies (SOFI), a company that helps with online loan refinancing; Class A shares of Coinbase Global Inc. (COIN), which runs a big cryptocurrency exchange; and Class A shares of Meta Platforms Inc. (META), a company that’s into social media and the metaverse.
2️⃣ Defiance Machine Learning & Quantum Computing ETF (QTUM)
- Performance in the Past Year: -9.5%
- Cost for Investors (Expense Ratio): 0.40%
- Annual Earnings from Investments (Annual Dividend Yield): 0.45%
- Average Daily Trading Volume in the Last Three Months: 11,563
- Total Value of Investments Managed (Assets Under Management): $112.2 million
- Start Date: September 4, 2018
- Issuer: Defiance ETFs
QTUM is a global fund that invests in different-sized companies. It uses the BlueStar Quantum Computing and Machine Learning Index to guide its investments. This index focuses on companies that are working on research, development, and selling of quantum computing systems and materials.
Some of the main investments in QTUM are Cirrus Logic (CRUS), a company that makes semiconductors; Class A sponsored ADRs of Baidu Inc. (BIDU), a Chinese company in internet services and AI; and Class A shares of Alteryx Inc. (AYX), a company that creates data analytics software.
3️⃣ ROBO Global Robotics & Automation Index ETF (ROBO)
- Performance in the Last Year: -12.8%
- Cost for Investors (Expense Ratio): 0.95%
- Annual Earnings from Investments (Annual Dividend Yield): 0.17%
- Average Daily Trading Volume in the Last Three Months: 111,752
- Total Value of Investments Managed (Assets Under Management): $1.4 billion
- Start Date: October 22, 2013
- Issuer: Exchange Traded Concepts
ROBO’s goal is to follow the ROBO Global Robotics & Automation Index, which shows how well companies in robotics, automation, and AI are doing. The ETF helps you invest in companies creating smart technology that can sense, process information, and take action. It also invests in companies that use this technology.
The fund combines different investment strategies by investing in both growth and value stocks. Its top three investments include Harmonic Drive Systems (6324:TKS), a Japanese company making parts for industrial robots and other products; IPG Photonics Corp. (IPGP), a company that creates fiber lasers; and Class A shares of Zebra Technologies Corp. (ZBRA), a company that makes mobile computing software and analytics tools.
Sources:
- Microsoft Corp. “Microsoft and OpenAI Extend Partnership.”
- VettaFi. “ETF Screener.”
- Precedence Research. “Artificial Intelligence Market.”
- Google Finance. “Financial Data.”
- iShares. “iShares Exponential Technologies ETF.”
- Defiance ETFs. “QTUM: The Machine Learning & Quantum Computing ETF.”
- VettaFi. “QTUM: Defiance Machine Learning & Quantum Computing ETF.”
- ROBO Global LLC. “ROBO Global® Index Series.”
- ROBO Global ETFs. “ROBO Global Robotics and Automation ETF (ROBO).”
- VettaFi. “ROBO: ROBO Global Robotics & Automation Index ETF.”
