Best AI ETFs for 2024

Jitanchandra Solanki
10 Min read

Exchange Traded Funds (ETFs) offer pathways for investing and diversifying your portfolio. An avenue within this investment strategy is AI ETFs - funds that specifically invest in companies concerned with the development of artificial intelligence (AI). Given the increasing adoption of AI in our daily lives we discuss some of the best AI ETFs to watch this year.

What are AI ETFs?

An ETF is a product that ‘tracks’ a particular index, product, or service to match the value of the product it is following. When it comes to AI ETFs, this means that the ETF tracks AI-related products. AI ETFs typically comprise technological companies dedicated to advancing data systems through the further development of AI.

Some companies are involved with the technological development of AI software. For example, Microsoft is heavily invested in ChatGPT, an AI-generated language model. Tech giant NVIDIA is involved in producing hardware for industrial AI. There are also so-called ‘AI-powered’ ETFs, which represent funds that use AI technology to support their trading decisions.

Investing in a diverse range of AI ETFs can help diversify your portfolio. It offers investors a gateway to gain exposure to a broad set of companies involved in AI development. Instead of only investing in one stock, these AI ETFs enable the investor to get exposure to the AI industry and participate in its possible growth.

The AI industry is currently growing every year with new AI-related companies and start-ups. There are many AI ETFs on the market already and this number is set to increase in the future as AI keeps developing.

Best AI ETFs to Watch

Below is a list of the best AI ETFs to watch. However, it is worth bearing in mind that using words like ‘best’ carries a certain sense of subjectivity, and your research is essential before making a trading decision and managing your portfolio. Nevertheless, this list will offer a good starting point to build your research.

  1. Global X Robotics & Artificial Intelligence ETF - Invests in companies that have the potential to benefit from the increased adaptation of AI-related technologies.
  2. First Trust Nasdaq Artificial Intelligence and Robotics - Fund that seeks investment results that correlate with the Nasdaq AI and Robotics Index.
  3. ARK Autonomous Technology & Robotics ETF - Invests in companies focused on energy, automation and artificial intelligence.

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Global X Robotics & Artificial Intelligence ETF

The Global X Robotics & Artificial Intelligence ETF seeks to invest in companies that are expected to benefit from the wider adaptation of AI-related technologies in the market. This includes, but is not limited to, industrial robotics. It is also concerned with non-industrial robots and autonomous vehicles. This AI ETF tracks and aims to correspond with the results of the Indxx Global Robotics & Artificial Intelligence Thematic Index.

The top 10 holdings of this global robotics and AI fund according to size of capital allocation are: NVIDIA Corps (~15.03%), Intuitive Surgical INC (~10.05%), ABB LTD-REG (~9.06%), Keyence Corp (~6.89%), Fanuc Corp (~5.85%), Dynatrace INC (~4.93%), UIPATH INC- Class A (~4.80%), SMC CORP (~4.07%), Yaskawa Electric Corp (~3.90%), Daifuku CO LTD (~3.27%).

The top sectors that the Global X Robotics & Artificial Intelligence ETF invests in are consumer discretionary (~36.4%), information technology (~30.2%), industrials (~22.7%), healthcare (~9.5%), financials (~0.8%) and energy (~0.4%).

With Admirals, you can trade the Global X Robotics & Artificial Intelligence ETF CFD. CFDs, or contracts for difference, are derivative contracts that track the underlying price of an asset. This enables investors to trade long and short using leverage. Learn more in The CFD Trading Guide

First Trust Nasdaq Artificial Intelligence and Robotics

The First Trust Nasdaq Artificial Intelligence and Robotics tracks the performance of companies engaged with AI, automation and robotics. This includes the technology and industrial sector, but also the economic sector. It tracks the performance of the Nasdaq CTA Artificial Intelligence and Robotics Index.

The top holdings of the Nasdaq Trust in order of capital allocation are: Upstart Holdings INC (~2.41%), SentineIOne INC (~2.25%), Illumina INC (~2.24%), Luminar Technologies INC (~2.07%), ANSYS INC (~2.00%), UiPath INC (~2.00%), Cerence INC (~1.84%).

The main sectors that constitute the fund are the technology sector (~56.90%), industrials (20,09%), consumer cyclical (~10.49%), healthcare (~5.15%), financial services (~2.65%), communication services (~2.62%), and consumer defensive (~2.02%).

ARK Autonomous Technology & Robotics ETF

The ARK Technology & Robotics ETF seeks long-term capital growth through investments in both domestic and foreign equity securities. These investments specifically target companies engaged in autonomous technology and robotics, aligning with the fund’s thematic focus on disruptive innovation. Companies that this fund invests in are expected to benefit from the technological improvements and advancements related to energy, automation, artificial intelligence and transportation. 

The top 10 holdings of ARKQ by size of capital allocation are: Tesla INC (~12.53%), UIPATH Inc - Class A (~10.18%), Kratos Defense & Security (~8.47%), Trimble INC (~6.99%), Iridium Communication INC (~6.81%), TeraDyne INC (~6.77%), Archer Aviation INC-A (~4.27%), Aerovironment INC (~3.90%), Deere & Co (~3.57%) en Komatsu-LTD Spons ADR (~3.47%).

The top sectors covered by this fund are information technology (~35.4%), industrials (~35.1%), consumer discretionary (~17.9%), and communication services (~9.00%). The rest of the sectors concern energy and healthcare and receive smaller amounts of the fund’s capital.

How to Invest in AI ETFs

With Admirals, you can invest in real stocks and ETFs, as well as trade CFDs on stocks and ETFs, with the following commissions:

  • UK stocks and ETFs – 0.1% of trade value, 1 GBP minimum commission.
  • US stocks and ETFs – From $0.02 per share, 1 USD minimum commission.
  • France/Germany stocks and ETFs - 0.1% of trade value, 1 EUR minimum commission.

You can learn more about trading and investing commissions on the Admirals Contract Specification page. You can search for global stocks and ETFs from the MT5 web platform and invest in four steps:

  1. Open an account with Admirals.
  2. Click on Trade on one of your live or demo trading accounts to open the web platform.
  3. Search for your symbol at the top of the search window.
  4. Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.
Source: Example of a chart and trading ticket from the Trade.MT5 web trading platform. Illustrative purposes only. Date captured: 29 January 2024.

 

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Conclusion: Pros & Cons of AI ETFs

The AI sector is becoming more popular as it is a potentially transformative technology. As technology is increasingly incorporated into our daily lives, with more consumers and businesses each year operating online, there are more opportunities for AI to also be adopted into this. This makes it an intriguing investment option due to its projected growth. On top of that, as the usefulness of artificial intelligence is gaining popularity in different sectors, the user case will also allow for this technology to improve over time as developers find ways to make it more reliable.

AI ETFs offer an opportunity for investors to invest in AI-related products without having to only stick to one type of stock. By investing in an ETF, it enables them to turn to more products that target these technologies. Therefore, AI ETFs offer a way of gaining exposure to the AI sector for investors looking to diversify their portfolio and who have an interest in the development of AI. It is worth mentioning that when looking for AI ETFs to invest in, whilst there are a lot of ETFs investing in AI technology, there are also ETFs that use AI to help diversify portfolios in other sectors.

Yet, the industry is also very young and bears uncertainties of what the future can hold. By investing in this type of technology, investors might end up paying higher costs due to the lack of assets that come with a small fund. Moreover, young start-up companies that are involved in the advancement of AI might not have what it takes to keep up when the industry matures. Additionally, as the AI industry is constantly evolving, investors would do well to review the holdings of their ETF to make sure these are still in line with their investment strategy.

Continue Reading:

FAQs on Best AI ETFs

 

What is an ETF?

An ETF is an exchange-traded fund. It is a product that is linked to an index of a certain product, sector or service. ETFs are traded on the market and they aim to correspond to the performance of the index, sector, or service they are tracking.

 

What is AI?

Artificial Intelligence (AI) is software that looks at the potential of AI-generated tools in different industries that imitate the performance of humans. These tools are mainly used in social media and online services but are also used in industries in the form of robotics and automation. Eventually, these AI-powered tools have the potential to substitute particular human labour in several industries.

 

What is the best AI ETF?

What constitutes the best AI ETH is subjective to the own goals and abilities of investors. However, the largest AI ETF is The Global X Robotics & Artificial Intelligence ETF with a fund that has $2.25 billion in assets under management. This fund offers a good starting point for performing your own research. 

 

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4. The Analysis is prepared by an independent analyst (Jitanchandra Solanki, hereinafter “Author”) based on personal estimations.

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