XT, QTUM, and ROBO are the top AI ETFs in sector that's gaining attention

Robotic hand


Factual errors generated by artificial intelligence (AI) technology on everything from outer space photography to men's health trained a laser focus on AI-powered chatbots such as OpenAI's ChatGPT and Google's Bard in February.

Despite these glitches that may dim AI programs' prospects for replacing human journalists for a while, the sector is primed for disruption and investment. Microsoft Corp. (MSFT) in January extended its multibillion-dollar partnership with OpenAI, as one example.

Three top-performing artificial intelligence (AI) exchange-traded funds (ETFs) offer broad-based exposure to this fast-growing segment of the technology industry. iShares Exponential Technologies ETF, Defiance Machine Learning & Quantum Computing ETF, and ROBO Global Robotics & Automation Index ETF lead rivals in a market estimated to be valued at up to $1.6 trillion by 2030.

Key Takeaways

  • News about factual errors generated by artificial intelligence (AI) programs has dimmed AI's prospects in journalism while drawing investor attention to the potential of the sector.
  • The AI sector underperformed the broader market over the past year.
  • Top-performing ETFs in this industry include iShares Exponential Technologies, Defiance Machine Learning & Quantum Computing, and ROBO Global Robotics & Automation Index.
  • The largest holdings of each of these funds are Class A shares of SoFi Techologies Inc., Cirrus Logic Inc., and Harmonic Drive Systems Inc., respectively.

About eight distinct ETFs trading in the U.S. focus on AI, excluding inverse and leveraged funds as well as those with less than $50 million in assets under management (AUM). Measured by the Nasdaq CTA Artificial Intelligence and Robotics Index, the industry benchmark had dropped 16% compared with a 9% drop for the S&P 500 Index in the last year as of Feb. 9.

Note: Some ETFs that use AI as a tool for picking stocks are also sometimes referred to as AI ETFs. But this story focuses on ETFs targeting companies that use AI for other industries, such as robotics, automation, health care, and automobiles.

We examine the three top-performing AI ETFs below. All numbers below are as of Feb. 8.

iShares Exponential Technologies ETF (XT)

  • Performance Over One Year: -8.4%
  • Expense Ratio: 0.46%
  • Annual Dividend Yield: 0.70%
  • Three-Month Average Daily Volume: 175,087
  • Assets Under Management: $3.3 billion
  • Inception Date: March 19, 2015
  • Issuer: BlackRock Financial Management

XT is a large-capitalization fund that targets the Morningstar Exponential Technologies Index. It selects global stocks advancing exponential technologies that have the potential for rapid disruption of their industries, including AI. Information technology stocks make up over half of the portfolio at almost 53%, followed by healthcare and industrials.

The top holdings of XT include shares of SoFi Technologies (SOFI), an online loan refinancing company; Class A shares of Coinbase Global Inc. (COIN), operator of a leading cryptocurrency exchange; and Class A shares of Meta Platforms Inc. (META), the social media and metaverse firm.

Defiance Machine Learning & Quantum Computing ETF (QTUM)

  • Performance Over One Year: -9.5%
  • Expense Ratio: 0.40%
  • Annual Dividend Yield: 0.45%
  • Three-Month Average Daily Volume: 11,563
  • Assets Under Management: $112.2 million
  • Inception Date: Sept. 4, 2018
  • Issuer: Defiance ETFs

QTUM is a multi-cap global fund using the BlueStar Quantum Computing and Machine Learning Index as a benchmark. Companies in the index are involved in research, development, and commercialization of quantum computing systems and materials.

The top holdings of QTUM include Cirrus Logic (CRUS), a semiconductor supplier; Class A sponsored ADRs of Baidu Inc. (BIDU), the Chinese internet services and AI company; and Class A shares of Alteryx Inc. (AYX), a data analytics software company.

ROBO Global Robotics & Automation Index ETF (ROBO)

  • Performance Over One Year: -12.8%
  • Expense Ratio: 0.95%
  • Annual Dividend Yield: 0.17%
  • Three-Month Average Daily Volume: 111,752
  • Assets Under Management: $1.4 billion
  • Inception Date: Oct. 22, 2013
  • Issuer: Exchange Traded Concepts

ROBO seeks to track the ROBO Global Robotics & Automation Index, which gauges the performance of companies engaged in robotics, automation, and AI. The ETF provides exposure to companies developing intelligent systems technology capable of sensing, processing, and acting, as well as to companies that apply that technology. The ETF follows a blended strategy of investing in a mix of value and growth stocks.

The fund's top three holdings are Harmonic Drive Systems (6324:TKS), a Japanese maker of components for industrial robots, semiconductor manufacturing equipment, and other products; IPG Photonics Corp. (IPGP), a maker of fiber lasers; and Class A shares of Zebra Technologies Corp. (ZBRA), a mobile computing software and analytics company.

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  2. VettaFi. “ETF Screener.”

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  10. VettaFi. “ROBO: ROBO Global Robotics & Automation Index ETF.”

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