Artificial intelligence (AI) is revolutionizing industries and economies worldwide, and investors are eager to capitalize on this transformative technology.
According to a PwC report, AI could contribute a staggering $15.7 trillion to global GDP by the end of the decade. This immense potential has sparked significant investor interest.
But navigating the complex landscape of AI stocks can be daunting. That’s where AI-focused ETFs come in. Individual AI stocks offer exposure to this burgeoning sector, and exchange-traded funds (ETFs) provide a diversified approach.
To help you navigate the maze, we’ve compiled the top nine best-performing AI ETFs based on critical factors like assets under management (AUM), fees, underlying index, and investment strategy.
Join us as we uncover the best AI ETFs to power your portfolio in 2024.
Importance of AI ETFs for Long-term Investment
Exchange-traded funds are investment funds that trade on stock exchanges, and AI ETFs are publicly traded funds that invest in companies involved in artificial intelligence development.
Investing in these ETFs allows investors to tap into the rapid advancements in AI and robotics, which are expected to shape the future of various industries, including healthcare, finance, and transportation.
AI ETFs provide several advantages:
- Diversification: They lower the risk associated with individual equities by providing exposure to various AI-related companies.
- Growth Potential: These ETFs are appealing for long-term investments because AI is a rapidly evolving sector with substantial development potential.
- Accessibility: Investors can more easily explore the AI sector using ETFs without having to possess a thorough understanding of the underlying technologies.
Criteria for Selecting Top Performing AI ETFs
When choosing the best AI ETFs for long-term investment, it’s essential to consider several key factors:
- Performance Metrics
- Market Capitalization and Liquidity
- Diversification within the ETF
- Fund Management and Expertise in the AI Sector
Top 9 Best Performing AI ETFs
Now, let’s uncover the 9 top performing ETFs in Artificial Intelligence.
Roundhill Generative AI & Technology ETF (CHAT)
CHAT is the newest ETF on this list, launched in May 2023. It is actively managed and doesn’t track an index. Roundhill curates a portfolio of 36 generative AI companies spanning platforms, infrastructure, enterprise, and consumer software. Holdings include tech giants like Google and Amazon, pure-play AI firms, and semiconductor players.
- Top holdings: Nvidia Corp, Microsoft Corp
- Expense ratio-0.75%
- Total assets-$187.6 million
Global X Robotics & Artificial Intelligence ETF (BOTZ)
BOTZ is the leading AI ETF, managing approximately $2 billion in assets. Introduced in September 2016, it seeks to capitalize on the growth of robotics and artificial intelligence. The ETF follows the Indxx Global Robotics & AI Thematic Index, encompassing companies across industries involved in AI development, manufacturing, and application, particularly in the industrial and healthcare sectors.
- Top Holdings-NVIDIA Corp, ABB LTD-REG, Intuitive Surgical INC
- Expense ratio-0.68%
- Total assets-$2.7 billion
Global X Artificial Intelligence & Technology ETF (AIQ)
As an alternative to BOTZ, Global X offers AIQ, which focuses exclusively on the AI sector. Tracking the Indxx Artificial Intelligence & Big Data Index, AIQ omits robotics and automation companies. This results in a heavier weighting towards technology stocks and less exposure to industrial and healthcare sectors than BOTZ.
- Top holdings: NVIDIA Corp, Meta Platforms Inc
- Expense ratio-0.68%
- Total assets-$2.1 billion
Invesco AI and Next Gen Software ETF (IGPT)
This ETF invests in companies driving the future of software development, tracking the STOXX World AC NexGen Software Development Index. The fund holds approximately 100 stocks, with its top 10 holdings accounting for about 61% of its assets.
- Top holdings: Alphabet (GOOGL), Meta Platforms (META), Nvidia (NVDA) and Adobe (ADBE)
- Expense ratio: 0.60 percent
- Total Assets: $275.6 million
iShares Robotics and Artificial Intelligence Multisector ETF (IRBO)
IRBO tracks the NYSE FactSet Global Robotics and AI Index, a benchmark of over 100 global robotics and AI leaders. Unlike most ETFs, it weighs small, medium, and large-cap stocks equally. The fund is heavily concentrated in U.S. tech companies.
- Top holdings- Global Unichip Corp, HubSpot Inc.
- Expense ratio- 0.47%
- Total assets- $662.2 million
Global X Data Center & Digital Infrastructure ETF (DTCR)
Global X’s DTCR ETF merges tech and real estate. It focuses on data center REITs and digital infrastructure, offering growth and income. Its 25 holdings, including Equinix, American Tower, Crown Castle, and Digital Realty Trust, provide targeted exposure.
- Top Holdings- American Tower Corp, Equinix INC, Digital Realty Trust INC
- Expense ratio-0.50%
- Total Assets- $89.43 million
First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT)
This ETF is managed by First Trust Advisors L.P., a U.S.-based firm, and serviced by Brown Brothers Harriman. It aims to replicate the performance of the Nasdaq CTA Artificial Intelligence and Robotics Index by investing 90% of its assets in the underlying index’s constituent common stocks and depositary receipts.
- Top holdings: Appian Corporation, Valeo S.A.
- Expense ratio: 0.65%
- Total assets: $294 million
WisdomTree Artificial Intelligence and Innovation Fund (WTAI)
This fund employs an indexing strategy to invest in firms at the forefront of artificial intelligence and innovative technologies. With a portfolio of about 80 stocks, the fund maintains a balanced approach, with its top 10 holdings comprising approximately 21% of the assets.
- Top holdings: ARM Holdings (ARM), Nvidia (NVDA), Meta Platforms (META) and Alphabet (GOOGL)
- Expense ratio: 0.45 percent
- Assets: $226.5 million
ROBO Global Artificial Intelligence ETF (NYSE: THNQ)
The ROBO Global Artificial Intelligence ETF tracks the performance of the ROBO Global Artificial Intelligence Index. It invests in companies building the technology and infrastructure powering AI, such as computing, data, and cloud services.
- Top holdings: Alphabet Inc Class A, Microsoft Corp
- Expense ratio: 0.68%
- Total assets: $31.34 million
Conclusion
Investing in AI ETFs offers a promising opportunity to benefit from artificial intelligence’s rapid growth and innovation. The 9 best AI ETFs highlighted in this blog provide a range of options for long-term investment.
For investors seeking long-term exposure to the AI sector, a buy-and-hold strategy utilizing a market order to purchase an AI ETF may be appropriate. Conversely, traders who capitalize on short-term price fluctuations within the AI ETF market may benefit from employing limit orders to execute trades at specific price levels.
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