Are Artificial Intelligence ETFs Hot Bets Now?
Despite taking a beating (down 16%) past year, iShares Robotics and Artificial Intelligence Multisector ETF IRBO has gained 17.4% past month, breezing past the S&P 500’s return of 4.5% and the Nasdaq-100 ETF QQQ’s 9.7% gains.
Robots and artificial intelligence (AI) are increasingly gaining precedence in our daily life. First, the pandemic-driven stay-at-home trend made it more important as we have become more dependent on the technology. Now, the growing accessibility and falling costs are also making the space more demanding and lucrative.
The global AI market size is projected to grow from $387.45 billion in 2022 to $1394.30 billion in 2029 at a CAGR of 20.1% in the forecast period, per Fortune Business Insights. AI adoption surged mainly in the healthcare sector. Compared to 2019, a bumper 150% increase in market growth was observed during the peak of the pandemic in 2020. Apart from healthcare, retail, ecommerce, logistics, and transportation have also been deploying AI.
How Hot Artificial Intelligence as An Investing Area?
Even though Wall Street is off to a great start to 2023, investors’ sentiments are still wavering. Tech layoffs have been intensifying. Still, BuzzFeed BZFD rose about 120% on Jan 26 as company plans to use AI to create content. The stock added about 11.5% after hours. This stock performance explains AI’s investing worth at the current level.
"We must look ahead and shift our business towards longer term trends in order to seize the opportunities that will come in the eventual recovery," Said BuzzFeed CEO Peretti, as quoted on Yahoo. Artificial intelligence can basically transform the productivity and GDP potential of the global economy, per PWC. PWC’s research reveals that 45% of total economic gains by 2030 will come from product enhancements, boosting consumer demand.
This will be possible because AI will bring about product variety, with increased personalization and affordability. The maximum economic benefit from AI will be in China (26% boost to GDP in 2030) and North America (14.5% boost), per PWC.
Against this backdrop, below we highlight a few artificial intelligence ETFs that are great bets now.
ETFs in Detail
The ROBO Global Robotics and Automation Index ETF ROBO
The ROBO Global Robotics and Automation Index ETF is the first ETF in the space, following the ROBO Global Robotics and Automation Index, which measures the performance of companies which derive a portion of revenues and profits from robotics-related or automation-related products or services. The fund has an asset base of $1.26 billion.
ROBO invests in 80 global companies that are driving transformative innovations in robotics, automation, and AI. No stock accounts for more than 2.03% of the fund. The fund ROBO charges 95 bps in fees.
The Global X Robotics & Artificial Intelligence ETF BOTZ
The Global X Robotics & Artificial Intelligence ETF is the largest product in the space, with more than $1.44 billion in assets. The fund follows the Indxx Global Robotics & Artificial Intelligence Thematic Index invests in companies that potentially stand to benefit from increased adoption and utilization of robotics and artificial intelligence, including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles.
KEYENCE (9.85%), ABB LTD (9.58%) and Intuitive Surgical (9.03%) get the highest allocations in the portfolio of BOTZ. The fund charges 68 bps in fees.
iShares Robotics and Artificial Intelligence Multisector ETF IRBO
iShares Robotics and Artificial Intelligence Multisector ETF has amassed about $251.0 million in assets. IRBOis the cheapest product in the space charging only 47 bps in fees. iShares Robotics and Artificial Intelligence Multisector ETF follows an equal-weighted index. No stock makes up more than 1.45% of the fund.
First Trust Nasdaq Artificial Intelligence and Robotics ETF ROBT
The First Trust Nasdaq Artificial Intelligence and Robotics ETF follows the underlying Nasdaq CTA Artificial Intelligence and Robotics Index, which is designed to track the performance of companies engaged in Artificial intelligence, robotics and automation. The $192.6-million-fund follows a modified equal-weighted index. The 111-stock fund ROBT charges 65 bps in fees. No stock accounts for more than 2.29% of the fund.
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ROBO Global Robotics and Automation Index ETF (ROBO): ETF Research Reports
Global X Robotics & Artificial Intelligence ETF (BOTZ): ETF Research Reports
First Trust NASDAQ Artificial Intelligence and Robotics ETF (ROBT): ETF Research Reports
iShares Robotics and Artificial Intelligence Multisector ETF (IRBO): ETF Research Reports
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