Artificial intelligence (AI) has captured the attention of investors as one of the most promising technologies of our time. With ChatGPT unveiled earlier this year, the public debate about AI, its potential opportunities, and the possible dangers it represents reached frenzied heights.
The intensity of the chatter around AI has led to some concerns that the space might be in a bubble or that interest in it could wane. However, a look at flows into ETFs that focus specifically on AI suggests that investor engagement remains strong.
Highest YTD Performing Artificial Intelligence ETFs
The Global X Robotics & Artificial Intelligence ETF (BOTZ) is the largest AI-focused fund currently trading on U.S. markets with $2.5 billion in assets. Launched on September 12, 2016, BOTZ has an expense ratio of 0.69%. In June so far, the ETF pulled in $155.01 million, bringing its total net flows for the year to $530.55 million. With a remarkable YTD return of 43.16%, investors are showing a keen interest in this fund and continue to invest in it.
The passively managed Global X Artificial Intelligence & Technology ETF (AIQ) is another heavyweight in the space with an AUM of $311.9 million. The fund launched on May 11, 2018, and has an expense ratio of 0.68%. In June, the fund recorded net flows of $61.42 million, bringing its total for the year to $126.32 million. The fund has a YTD return of 39.60% and clearly continues to be a popular choice among investors.
Other AI ETFs
The First Trust Nasdaq Artificial Intelligence & Robotics ETF (ROBT) launched on February 21, 2018, and tracks an index. It has an expense ratio of 0.65% and an AUM of $355.7 million. In June, ROBT recorded net flows of $42.46 million, bringing its total net flows for the year to $119.59 million, roughly one-third of its total assets. It delivered a return of 30.68% YTD.
The iShares Robotics and Artificial Intelligence Multisector ETF (IRBO) has also seen inflows. The passively managed fund was launched on June 26, 2018. It has an expense ratio of 0.47%, making it a low-cost option for investors seeking to invest in this growing industry. The fund has $402.8 AUM. In June, IRBO had net flows of $38.02 million; its net flows for the year are $110.27 million. The fund has a YTD return of 30.49%
Finally, the Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 2X Shares (UBOT) is another AI ETF — but with a twist. UBOT is a leveraged ETF that seeks to provide 2x the daily performance of the Robotics, Artificial Intelligence & Automation Index. Leveraged ETFs can see wild swings in their flows because they are used as tactical trading tools and their prices can fluctuate dramatically.
UBOT rolled out on April 19, 2018, and has an expense ratio of 1.35%, which is pretty high. The fund has $36.7 million AUM. In June, UBOT had net flows of $6.31 million; its net flows for the year are $11.30 million. The fund has a strong YTD return of 96.38%.
What Does the Flow Data Suggest?
Overall, the data suggests that investors continue to maintain their interest in Artificial Intelligence ETFs. With the strong YTD returns of these funds, investors are continuing to pour money into them. That could be returns-chasing behavior, or it could reflect the confidence investors have in the growth potential of such companies. AI-focused ETFs offer a way to capitalize on that potential.
However, the performance of these funds is not guaranteed, of course. Like any investment, AI ETFs come with risks, and investors should carefully consider them before investing.
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