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As we move through 2023, artificial intelligence (AI) stands out as a a big and important part of technology, with good opportunities for investment. AI is growing fast with new innovations like OpenAI’s ChatGPT and big changes by large tech companies, making the sector full of potential. But, For investors wanting to benefit from this growth, finding individual stocks to invest in can be hard.
This is where AI ETFs come in: they are a selected mix that gives investors a chance to invest in the top AI companies without picking individual stocks. This guide will talk about the 7 best AI ETFs of 2023, giving insights on how they perform, their assets, and their strategies. Also, This will help investors make informed decisions in this dynamic sector.
01
of 07Global X Robotics & Artificial Intelligence ETF (BOTZ)
The Global X Robotics & Artificial Intelligence ETF, also known as BOTZ, is a prominent player in the AI ETF area with a impressive AUM (Assets Under Management) of about $2.3 billion. Launched in September 2016, BOTZ tracks the Indxx Global Robotics & Artificial Intelligence Thematic Index. This means it invests in a variety of companies that are leaders not just in AI, but also in robotics and automation industries like healthcare. This includes many tech stocks that are innovating and deploying AI and robotics solutions.
BOTZ’s portfolio is broader than some AI-focused ETFs, encompassing both robotics and AI. The underlying index includes companies in different segments like Industrial Robotics, Non-Industrial Robots, AI, and Unmanned Vehicles. Some of the top companies it invests in, which are leaders in AI and robotics, are Nvidia, Intuitive Surgical, and Keyence Corp. However, people looking to invest should know that individual stocks might make up to 8% of the portfolio.
While BOTZ gives a good overview of the AI and robotics industry, there are a couple of important things to note. The ETF has a somewhat high expense ratio of 0.68%, but it has a strong history of returns which might make this worth it for people who are optimistic about the long-term growth of AI and robotics. Also, BOTZ has done well, with its value increasing by 35.4% this year, showing it has good potential for growth.
02
of 07ARK Autonomous Technology & Robotics ETF (ARKQ)
The ARK Autonomous Technology & Robotics ETF, short for ARKQ, is a smart ETF that invests in global companies leading in automation, energy, and advanced manufacturing. Managed by the famous ARK Invest, this fund uses special research to find stocks ready for big changes through innovation. With a significant value of about $934.66 million in net assets, ARKQ is dedicated to investing in companies that bring disruptive innovation. It holds stocks of big companies like Tesla Inc. and UiPath Inc., showing its focus on technological progress.
ARKQ has done well, with its value increasing by 42.77% so far this year. This shows its skill in taking advantage of the growth in the sectors it has chosen to invest in. As of July 13, the ETF’s price was $58.55, showing steady growth. However, people thinking about investing should be aware of its net expense ratio of 0.75%. But with robust performance, combined with its strategic holdings in companies like Kratos Defense & Security Solutions Inc., ARKQ is a top pick for those interested in the transformative potential of autonomous technology and robotics.
03
of 07ROBO Global Robotics & Automation Index ETF (ROBO)
The ROBO Global Robotics & Automation Index ETF, or ROBO, is a great investment option for people interested in robotics, automation, and AI. Established on October 22, 2013, by Exchange Traded Concepts, ROBO has collected an impressive $1.4 billion in assets. It carefully follows the ROBO Global Robotics & Automation Index, giving investors a chance to invest in companies that are making and using smart technologies in different sectors. This blend of value and growth stocks ensures a balanced exposure, with top holdings like Harmonic Drive Systems, a Japanese industrial components manufacturer, IPG Photonics Corp., a fiber laser producer, and Zebra Technologies Corp., a leader in mobile computing software and analytics.
Managed by ROBO Global, a dominant player in robotics and automation investment services, the fund’s portfolio includes leading companies from around the world in areas like healthcare and industrial automation. Some important companies in the fund are Yaskawa Electric Corp from Japan, ABB Ltd., and Teradyne Inc. These companies are poised for significant growth in robotics and automation. While the ETF’s expense ratio is 0.95%, which is a bit high, but its investment in different countries and sectors helps balance the risk.
04
of 07First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT)
The First Trust Nasdaq Artificial Intelligence and Robotics ETF, also known as ROBT, offers a distinct approach to investing in AI and robotics. Managed by First Trust, a well-known provider of rules-based thematic ETFs, ROBT closely tracks the Nasdaq CTA Artificial Intelligence and Robotics Index.
The ETF uses a special system to classify its holdings as AI or robotics “enablers, engagers, or enhancers.” This means it sorts companies based on whether they make AI parts, design AI systems, or offer extra services. To give investors a variety of options, the top 30 companies from each category are chosen, with 60% being engagers, 25% enablers, and 15% enhancers. Each category’s holdings are then given equal weight, making a balanced portfolio that isn’t too focused on the top and offers a global perspective.
With $428.3 million in assets and a net expense ratio of 0.65%, ROBT gives a full view of the AI and robotics areas. While its method of giving equal weight might limit gains from large AI stocks, the ETF’s focus on companies deeply involved in AI, in both making and delivering products, makes it a good choice for investors. As of June 30, the fund’s return over 3 years is 8.5%, showing its potential as a smart investment in AI and robotics.
05
of 07WisdomTree Cloud Computing Fund (WCLD)
The WisdomTree Cloud Computing Fund (WCLD) is a passively managed ETF giving investors a focused way to invest in the growing cloud computing industry. It tracks the BVP Nasdaq Emerging Cloud Index and uses an equal-weighted approach, which means it invests in a variety of U.S.-listed cloud computing companies of different market caps.
Launched in September 2019, the fund has accumulated over $645 million in assets with a low expense ratio of 0.45%. The index’s strict rules, requiring new entrants to have at least 15% revenue growth over the past two years and current companies to maintain a minimum of 7% growth, ensures that the ETF remains focused on high-performing cloud companies.
With an average market size of $6.73 billion and 70 holdings, the top 10 constitute 18% of the portfolio, giving investors a mix of different investments while still focusing on the top companies. Also, The ETF has a good three-year return of 9.87%, showing its potential for growth.
Most of WCLD’s investments are in the Information Technology sector, making up 86.50% of its portfolio, with Financials and Telecom rounding out the top three. Important holdings are Squarespace Inc, Momentive Global Inc, and Asana Inc, showing the fund’s focus on leading companies.
However, potential investors should be aware of the risks involved. The fund has a beta of 1.08 and a three-year standard deviation of 41.55%. Despite these risks, the ETF’s performance has been impressive, with a gain of 19.54% this year and a one-year increase of 6.50%.
06
of 07Global X Artificial Intelligence & Technology ETF (AIQ)
The Global X Artificial Intelligence & Technology ETF, or AIQ, provides investors a chance to invest in the rapidly growing sectors of AI and big data. Uniquely, AIQ actively tracks the Indxx Artificial Intelligence & Big Data Index, focusing only on companies leading in AI development, utilization, and and those providing essential hardware for big data applications. This means the ETF doesn’t invest in robotics and automation stocks, leading to more investment in technology stocks.
With an AUM of $523.1 million and a net expense ratio of 0.68%, AIQ stands out for its pure AI focus, offering a different investment option compared to its sibling, BOTZ. Also, AIQ has a strong three-year return of 10.98%, showing its growth potential.
The ETF’s portfolio is globally diversified, spreading across both developed and emerging markets, with a substantial 69% concentration in U.S. stocks. Furthermore, AIQ employs a modified-market-cap-weighted index approach, capping its investments in each company at 3% to ensure balanced exposure.
The ETF’s top holdings include industry giants like Nvidia Corp, Meta Platforms, and Tesla Inc. These companies are not only poised to benefit from AI technology but also produce crucial hardware for big data analytics. With a year-to-date return of 31.8%, AIQ stands out as a wise choice for investors interested in the powerful potential of AI and big data.
of 07iShares Robotics and Artificial Intelligence Multisector ETF (IRBO)
The iShares Robotics and Artificial Intelligence Multisector ETF, or IRBO, offers investors a special mix of global stocks focused on robotics and AI. It tracks the NYSE FactSet Global Robotics and Artificial Intelligence Index, providing investment in over 100 holdings in the robotics and AI areas. Different from many similar ETFs, IRBO uses an equal-weighted method, giving balanced investment in small-, mid-, and large-sized company stocks. With an AUM of $488.2 million and a low expense ratio of 0.47%, IRBO works hard to reduce risk and offer a global view. More than half of its portfolio is in the technology sector, including big companies like Meta Platforms, Nvidia, and Apple.
IRBO invests globally, with 52.2% of its holdings from the U.S., and important contributions from China, Japan, and Taiwan. It invests in different parts of robotics and AI, like industrial robots, 3D printing, drones, and the development of both software and hardware for these technologies. While its equal-weight method may limit gains from large AI stocks, the ETF has a three-year return of 5.15%. With its focus on leading companies in AI and robotics, IRBO is a good choice for investors who believe in the long-term growth of this sector.
