5 Artificial Intelligence ETFs (Updated 2022)
The artificial intelligence sector is expected to be worth over US$190 billion by 2025. Here are five artificial intelligence ETFs for investors who want broad exposure to this developing industry.
It might be surprising, but the phrase "artificial intelligence" has been around for over half a century — since 1955, in fact. It was intended to describe a new computer science subdiscipline. But what exactly is artificial intelligence?
In simple terms, artificial intelligence, or AI, means "simulated intelligence in machines." In other words, machines with AI are capable of thinking like people and mimicking their actions. The ideal characteristic of AI is the ability to rationalize.
Case in point: Research conducted by Markets and Markets suggests the AI industry will be worth over US$407 billion by 2027, increasing at a compound annual growth rate of 36.2 percent between 2022 and 2027. With that much money going into the sector, there is certainly no shortage of ways for investors to add AI investments to their portfolios.
For those who are new to this segment of the technology arena and would prefer to gain exposure to the overall market rather than specific AI stocks, exchange-traded funds (ETF) are a popular avenue. Here the Investing News Network looks at five AI-focused ETFs listed on ETFdb.com. All details were current as of November 21, 2022.
According to ETFdb.com, these AI ETFs are required to meet one of three criteria:
- Focus on stocks developing new products, services or technological improvements in AI-related research.
- Have 25 percent portfolio exposure to companies that spend money on AI research and development expenses.
- Use of AI methods to choose individual securities to be included in the fund.
1. SPDR S&P Kensho New Economies Composite ETF (ARCA:KOMP)
Assets under management (AUM): US$1.67 billion
The SPDR S&P Kensho New Economies Composite ETF looks to companies advancing “new economy” technologies. The index underlying the fund is a composite of various Kensho new economies sub-indexes. The ETF offers exposure to firms involved in vehicle automation, robotics, 3D printing, nanotechnology, exponential processing power and AI.
2. Global X Robotics & Artificial Intelligence Thematic ETF (NASDAQ:BOTZ)
AUM: US$1.351 billion
The Global X Robotics & Artificial Intelligence Thematic ETF offers exposure to firms involved in the global automation and robotics industries. According to ETF.com, the Global X Robotics ETF was launched in September 2016 and has holdings in various markets, including technology, healthcare and energy. Eligible companies must earn a significant portion of their revenue from, or have a stated business purpose in, the fields of robotics or AI.
3. Robo Global Robotics and Automation Index ETF (ARCA:ROBO)
AUM: US$1.2 billion
The Robo Global Robotics and Automation Index ETF, launched in October 2013, was the first robotics and automation ETF to market. As its name suggests, it follows companies involved in those sectors.
Robo Global currently tracks 83 companies, and its top two holdings are Intuitive Surgical and Cognex (NASDAQ:CGNX).
4. ARK Autonomous Technology & Robotics ETF (ARCA:ARKQ)
AUM: US$904 million
The ARK Autonomous Technology & Robotics ETF was created in September 2014, and primarily focuses on advancements in autonomous vehicles, robotics, 3D printing and energy storage technology that enhances productivity and reduces costs.
The fund describes itself as including companies that may "benefit from the development of new products or services, technological improvements and advancements in scientific research related to, among other things, energy, automation and manufacturing, materials and transportation."
5. iShares Robotics and Artificial Intelligence ETF (ARCA:IRBO)
AUM: US$231 million
The last AI ETF on this list is the iShares Robotics and Artificial Intelligence ETF, which is relatively new — the fund launched in June 2018. It tracks an index composed of 114 developed and emerging market companies that could benefit from long-term growth in robotics technologies and AI. The fund has the lowest expense ratio of the AI funds on this list at 0.47 percent.
This is an updated version of an article originally published by the Investing News Network in 2017.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.