It’s no secret that exchange-traded funds (ETFs) are among the most popular and fastest-growing investment vehicles today. At the same time, artificial intelligence (AI) has captured a larger and larger share of the attention of tech-focused startups and similar companies. It follows, then, that it was only a matter of time before these two trendy touchstones would intersect.
AI is a branch of computer science that aims to create intelligent, learning machines that are capable of many of the same processes as human beings. ETFs focused in this area of technology could benefit from the continued development and utilization of AI in many sectors, including those incorporating robotics, 3D printing, language processing, social media, self-driving cars and more.
Below, we'll explore some of the leading ETFs that emphasize AI. The funds on this list are drawn from a report by ETFdb.com and are generally those that specifically invest in companies that develop products related to AI. In some cases, these ETFs have at least 25% portfolio exposure to companies that devote a large percentage of assets toward AI research. In other cases, these ETFs are those that actually make use of AI methodologies to select securities for investment. (See also: How Artificial Intelligence Will Boost These 8 Stocks.)
Invesco QQQ is an equity fund with assets totaling just under $68 billion and year-to-date returns of roughly 13%. With 104 holdings, QQQ remains particularly focused on the FAANG stocks. As of this writing, Apple Inc. (AAPL) receives a weighting of 11.33%, while Amazon.com, Inc. (AMZN) receives 10.26%, for instance. Other notable companies with links to AI include Intel Corporation (INTC) at 2.89% and Texas Instruments Incorporated (TXN) with a 1.36% weight.
The Technology Select Sector SPDR Fund holds 76 different names. At less than one-third the size of QQQ, XLK has total assets of about $22 billion, as well as a year-to-date return of more than 9.5%. Like QQQ, XLK remains primarily focused on top tech names with a link to AI, including Microsoft Corporation (MSFT) and Alphabet Inc. (GOOG). Other companies with ties to AI make their way into XLK's holdings at lower levels, including Oracle Corporation (ORCL) at a 2.05% weighting and Adobe Systems Incorporated (ADBE) with a 1.84% weighting. (For more, see: 3 Top-Ranked Stocks Leading the AI Revolution.)
At close to $21 billion in size with just 515,000 in average volume, the Vanguard Information Technology ETF is often overlooked in comparison with some of the other ETFs on this list. (QQQ's average volume is more than 40 million.) VGT is nonetheless a high-performing AI ETF, with a year-to-date return of 11.03%. VGT is broadly diversified, with a basket of more than 350 names. The largest of these are Apple (15.04%) and Microsoft (11.65%). A host of smaller weights are assigned to AI-focused tech companies like Broadcom Inc. (AVGO) and International Business Machines Corporation (IBM), too.
The Global X Robotics & Artificial Intelligence Thematic ETF is highly specialized, with just 29 holdings. At just $2.3 billion in assets, BOTZ is much smaller than its rivals on this list. It is also one of the few ETFs here to have suffered losses this year. The largest holdings in BOTZ's basket at this point are NVIDIA Corporation (NVDA) and Intuitive Surgical, Inc. (ISRG), each weighted at more than 10%. Keyence Corporation (KYCCF), Yaskawa Electric Corporation (YASKY) and Fanuc Corporation (FANUY) represent a few of many of the Japanese companies currently in BOTZ's holdings. Indeed, most of the stocks making up the BOTZ portfolio at this point are headquartered in Asia, reflecting the intense focus on AI technology in this part of the world. (To learn about another intersection between AI and the ETF space, with the technology being used to make investment decisions, check out: Jim Rogers Launches AI-Driven ETF.)