The artificial intelligence sector is expected to be worth $16 billion by 2022. Here we look at four artificial intelligence ETFs for investors to consider.
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 sub-discipline.
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, sort of like a robot. The ideal characteristic of AI is the ability to rationalize.
Of course, that is a very broad definition of the capabilities AI encompasses. There are actually at least 10 different types of AI, which seems to prove that this market isn’t going anywhere anytime soon.
Case in point: research conducted by Markets and Markets suggests the AI industry will be worth over $16 billion by 2022, increasing at a compound annual growth rate of 62.9 percent between 2016 and 2022. With that much money going into the sector, there is certainly no shortage of ways for investors to get their feet wet and add AI investments to their portfolios.
For those who are new to investing and would rather invest in a market rather than a specific company, ETFs are a popular way to do so. Here the Investing News Network looks at the four solely AI-focused ETFs listed on ETFdb.com. The list was current as of September 6, 2018.
According to ETFdb.com, these artificial intelligence ETFs are required to meet one of three criteria:
- involvement in developing new products, services or technological improvements in scientific research related to AI;
- funds that 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. Buzz US Sentiment Leaders ETF (ARCA:BUZ)
First on our artificial intelligence ETFs list is the Buzz US Sentiment Leaders ETF, which is relatively new — the fund came into being in April 2016. It tracks the Buzz NextGen AI US Sentiment Leaders Index, which follows the 75 US-listed stocks that are the most discussed in news articles, blogs and social media sources; all stocks must have a minimum market cap of $5 billion.
Some of the Buzz US Sentiment Leaders ETF’s top holdings include Micron Technology (NASDAQ:MU), Square (NYSE:SQ), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) and NVIDIA (NASDAQ:NVDA).
2. Global X Robotics & Artificial Intelligence Thematic (NASDAQ:BOTZ)
The next fund on our artificial intelligence ETFs list is the Global X Robotics & Artificial Intelligence Thematic ETF, which launched in September 2016. It offers exposure to firms involved in the global automation and robotics industries.
According to ETF.com, the Global X Robotics ETF has net assets of $2.2 billion, with holdings in markets such as industrials, technology, healthcare and energy. Eligible companies are listed in developed countries and must earn a significant portion of their revenue from, or have a stated business purpose in, the field of robotics or artificial intelligence
The ETF currently tracks 37 holdings, with its biggest one being Intuitive Surgical (NASDAQ:ISRG) and its second-largest one being NVIDIA.
3. ARK Industrial Innovation ETF (ARCA:ARKQ)
The ARK Industrial Innovation ETF came 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.”
ARK tracks between 30 and 50 holdings, with its two biggest holdings being Stratasys (NASDAQ:SSYS) and Tesla (NASDAQ:TSLA). According to its website, it currently has $147 million in assets, and by 2035 it plans to have over $12 trillion invested in automation and robotics.
4. Robo Global Robotics and Automation Index (NASDAQ:ROBO)
Last but not least on our artificial intelligence ETFs list is the Robo Global Robotics and Automation Index, whose inception date is October 2013.
It was the first robotics and automation ETF to market, and as its name suggests, the fund follows companies involved in those sectors. It currently tracks 87 companies, and its top two holdings are iRobot (NASDAQ:IRBT) and Oceaneering International (NASDAQ:OII).
Which of these artificial intelligence ETFs would you invest in and why? Tell us in the comments.
This is an updated version of an article originally published by the Investing News Network in 2017.
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Securities Disclosure: I, Amanda Kay hold no direct investment interest in any company mentioned in this article.