Artificial Intelligence ETFs offer targeted exposure to the AI sector by investing in a diverse range of AI and tech companies. They spread risk across multiple stocks, making them crucial for forward-looking investors seeking to capitalize on AI’s growth while minimizing individual stock risk.
As AI revolutionizes tech investing, investors might consider strong artificial intelligence ETFs, such as the First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT), the Robo Global Artificial Intelligence ETF (THNQ), and the Global X Robotics & Artificial Intelligence ETF (BOTZ).
AI is integrating intelligent solutions into various industries, driving innovation, and creating diverse investment opportunities. Its impact is reshaping market dynamics, offering high growth potential while posing significant risks, making informed investment decisions crucial. This year, the AI market surpassed $184 billion, up nearly $50 billion from 2023, and is projected to exceed $826 billion by 2030.
On top of it, AI plays a vital role in today’s digital business landscape, offering powerful tools for task automation, improved decision-making, and intelligent recommendations. Investing in AI ETFs is particularly attractive now due to growing AI adoption, strong market demand, and the diversification they offer, which reduces individual stock risk while capturing the broader AI sector’s potential.
Given this favorable backdrop, let’s evaluate the three Technology Equities ETFs picks, starting with number three.
ETF #3: First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT)
ROBT is an exchange-traded fund launched and managed by First Trust Advisors L.P. The fund invests in public equity markets, targeting stocks of companies in information technology, software and services, systems software, automation products and services, software research, and artificial intelligence sectors. It invests in both growth and value stocks across diverse market capitalizations. The fund seeks to track the performance of the Nasdaq CTA Artificial Intelligence and Robotics Index using a full replication technique.
With $458.70 million in assets under management (AUM), ROBT’s top holding is Upstart Holdings, Inc. (UPST) with a 2.93% weighting, followed by SentinelOne, Inc. Class A (S), with a 2.59% weighting, and Palantir Technologies Inc. Class A. (PLTR), with 2.53%. It has a total of 109 holdings.
It has an expense ratio of 0.65%, higher than the category average of 0.58%. It currently has a NAV of $43. ROBT’s fund inflows came in at $39.02 million over the past year.
The fund’s annual dividend of $0.11 yields 0.27% on the current share price. Its four-year average yield is 0.20%. Moreover, its dividend payouts have increased at a CAGR of 6% over the past three years.
ROBT has gained 3.1% over the past year and 3% over the past nine months to close the last trading session at $42.96.
ROBT’s POWR Ratings reflect this promising outlook. The ETF’s overall B rating equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
ROBT has an A grade for Trade and a B for Buy & Hold. Of the 119 ETFs in the Technology Equities ETFs group, it is ranked #64. Click here to access all of ROBT’s POWR Ratings.
ETF #2: Robo Global Artificial Intelligence ETF (THNQ)
THNQ is an exchange-traded fund launched and managed by Exchange Traded Concepts, LLC. It invests in public equity markets globally. The fund targets stocks of companies in information technology, software and services, systems software, software research, and artificial intelligence sectors. It invests in both growth and value stocks across diverse market capitalizations. The fund seeks to track the performance of the ROBO Global Artificial Intelligence Index using a full replication technique.
With $133.60 million in AUM, the fund has a total of 58 holdings. THNQ’s top holding is Samsara, Inc. Class A (IOT) with a 2.75% weighting, followed by Palo Alto Networks, Inc. (PANW) with a 2.59% weighting, and Cloudflare Inc Class A (NET) with 2.45%.
THNQ has an expense ratio of 0.68%, higher than the category average of 0.58%. It currently has a NAV of $44.20. Its fund inflows came in at $47.87 million over the past year.
THNQ has gained 17.3% over the past nine months and 27.5% over the past year to close the last trading session at $44.04.
THNQ’s strong outlook is reflected in its POWR Ratings. The ETF has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Buy & Hold, Peer, and Trade. It is ranked #31 in the same group. To access all the POWR Ratings for THNQ, click here.
ETF #1: Global X Robotics & Artificial Intelligence ETF (BOTZ)
BOTZ is an exchange-traded fund launched and managed by Global X Management Company LLC. The fund invests in public equity markets in developed regions globally. It targets stocks of companies involved in the development of robotics and artificial intelligence, including those working on industrial robots, automated inventory management, unmanned vehicles, voice/image/text recognition, and medical robots or robotic instruments. The fund aims to track the performance of the Indxx Global Robotics & Artificial Intelligence Thematic Index using a full replication technique.
With $2.64 billion in assets under management (AUM), BOTZ’s top holding is NVIDIA Corporation (NVDA) with a 12.48% weighting, followed by Intuitive Surgical, Inc. (ISRG), with a 10.15% weighting, and Dynatrace, Inc. (DT), with 4.56%. BOTZ has a total of 45 holdings.
BOTZ has an expense ratio of 0.68%, higher than the category average of 0.65%. It currently has a NAV of $31.62. Its fund inflows came in at $20.43 million over the past six months.
The ETF pays an annual dividend of $0.05, which yields 0.15% on the current price. It has a four-year average dividend yield of 0.21%.
BOTZ has gained 22.2% over the past year and 20% over the past nine months to close the last trading session at $31.49.
BOTZ’s POWR Ratings reflect its promising prospects. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system.
BOTZ has an A grade for Buy & Hold and Trade. In the Technology Equities ETFs group, it is ranked #11. Click here to access all of BOTZ’s POWR Ratings.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
BOTZ shares were trading at $31.75 per share on Tuesday afternoon, up $0.26 (+0.83%). Year-to-date, BOTZ has gained 11.56%, versus a 18.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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