Quick Read
-
XAIX offers low-cost AI exposure: Its patent-based screening process focuses on companies actively developing AI technologies while keeping fees relatively low at 0.35%.
-
CHAT takes an active approach: The fund uses proprietary research to identify companies most exposed to generative AI, resulting in a more concentrated and higher-conviction portfolio.
-
Position sizing still matters: AI remains a high-risk theme, so these ETFs work best as satellite holdings alongside a diversified core portfolio.
-
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Roundhill Generative AI & Technology ETF didn’t make the cut. Grab the names FREE today.
Artificial intelligence and robotics remain among the most popular investment themes on the market. The problem is that a lot of investors approach them the wrong way. Rather than trying to identify the next moonshot startup before everyone else, I generally prefer using thematic ETFs.
Even though thematic ETFs have their flaws, they still provide some diversification and reduce the risk that comes from betting everything on a single stock. That said, investors should still be selective. Many thematic ETFs charge high fees, launch near the peak of a hype cycle, and end up holding little more than an expensive basket of the same technology stocks you could already own through a broad market ETF.
Still, a handful of AI-focused ETFs have proven themselves to be reasonably constructed and worthy of consideration. If I had $10,000 to allocate toward the theme today, these are two funds I would look at: one low-cost passive option and one actively managed fund.
Xtrackers Artificial Intelligence and Big Data ETF
The first ETF is the Xtrackers Artificial Intelligence and Big Data ETF (XAIX). Unlike many thematic funds that simply screen companies based on current AI-related revenue, XAIX attempts to identify firms actively developing AI technologies.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Roundhill Generative AI & Technology ETF didn’t make the cut. Grab the names FREE today.
The process begins with a universe of more than 1,700 companies. From there, the index uses a proprietary patent-based screening process to identify businesses engaged in areas such as deep learning, natural language processing, image and speech recognition, cloud infrastructure, cybersecurity, and big data analytics.
The index then assigns an intensity score based on how extensively companies participate in these fields. The goal is to identify firms demonstrating meaningful research and development activity rather than simply benefiting from current AI enthusiasm.
Leave a comment