4 ETFs Focused on Growth in Artificial Intelligence
The role of Artificial Intelligence (AI) in the modern economy is growing exponentially, and its growth is likely to continue rapidly into the future. A recent study conducted by Markets and Markets suggests that the AI industry will be worth over $16 billion by 2022, which would mark a compound annual growth rate (CAGR) of 62.9% over the next five years. Yes, you read that figure correctly—annualized growth of over 60% each year for the foreseeable future!
With AI’s rapid growth and adoption across many industries and for many purposes, corporations are literally racing to research and develop AI for their business, for fear of being left behind. As money pours into the economy for the development of AI, it follows that the companies who are actively developing new AI and applications in robotics could stand to benefit greatly.
As a result, there have been a few ETFs that have sprung up recently to track companies active in AI development and robotics, which allow investors to potentially gain exposure in their portfolios to AI without having to take-on company-specific risk. To note, I do not personally recommend any of the 4 ETFs below and investors should be advised that any investment in the equities markets involves risk of loss. I am simply pointing out that these 4 ETFs exist within the realm of AI, but interested investors should conduct due diligence on their own before investing.
The AI ETFs I mention below meet each of these three criteria:
- The companies within the ETFs are involved in developing new products, services, technological improvements in scientific research related to AI
- The funds have a 25 percent portfolio exposure to companies that spend money on AI research and development expenses;
- The funds use AI methods to choose individual securities to be included in the fund.
With that, here are the four ETFs.
ETF #1: BUZ
The Buzz US Sentiment Leaders tracks the BUZZ NextGen AI US Sentiment Leaders Index, which follows the 75 most-discussed holdings through news articles, blogs, and social media sources, all with a minimum market cap requirement of $5 billion. Some of the ETFs top holdings are ones you might recognize, such as Micron Technology (MU), Tesla (TSLA) and Amazon (AMZN).
ETF #2: BOTZ
The Global X Robotics & Artificial Intelligence Thematic ETF offers exposure to firms involved in the global automation and robotics industries. Some of the stocks in the ETF are in markets such as hardware, software, and management of automated products and services, which can include autonomous cars, 3D printers, navigational systems, and medical devices.
ETF #3: ARKQ
The Industrial Innovation ETF primarily focuses on advancements in autonomous vehicles, robotics, 3D printing, and energy storage technology that enhances productivity and reduces costs. According to its website, by 2035 over $12 trillion will be invested in automation and robotics.
ETF #4: ROBO
The Robo Global Robotics and Automation Index has been around the longest of the 4 ETFs, with an inception date going back to 2013. This ETF tracks companies involved in robotics and automation, much like the others. One of its top holdings is iRobot (IRBT).
