The increased use of artificial intelligence (AI) on the battlefield is prompting the Pentagon to adopt is new ethical principles. The new principles will call for participants to “exercise appropriate levels of judgment and care” when using when using AI systems in combat.

Per an AP news report, the “decisions made by automated systems should be ‘traceable’ and ‘governable,’ which means ‘there has to be a way to disengage or deactivate’ them if they are demonstrating unintended behavior, said Air Force Lt. Gen. Jack Shanahan, director of the Pentagon’s Joint Artificial Intelligence Center.”

As AI enters the fold as part of the technology arms race, it’s big money for companies that are able to capitalize on the growth of disruptive technology.

“The Pentagon’s push to speed up its AI capabilities has fueled a fight between tech companies over a $10 billion cloud computing contract known as the Joint Enterprise Defense Infrastructure, or JEDI,” the report noted. “Microsoft won the contract in October but hasn’t been able to get started on the 10-year project because Amazon sued the Pentagon, arguing that President Donald Trump’s antipathy toward Amazon and its CEO Jeff Bezos hurt the company’s chances at winning the bid.”

The report also noted that an existing 2012 military directive already addresses humans to be in control of automated weapons, but doesn’t specifically call out more broad uses of AI. The new principles are meant to address both combat and non-combat applications, such as intelligence operations to the maintenance of military equipment.

Disruptive Options in Defense Sector

For ETF investors looking for a military tilt, they can look at funds like the SPDR S&P Aerospace & Defense ETF (NYSEArca: XAR). XAR seeks to provide investment results that correspond generally to the total return performance of the S&P Aerospace & Defense Select Industry Index, which represents the aerospace and defense segment of the S&P Total Market Index.

Opportunities can also be had via disruptive technology through funds like the ARK Innovation ETF (NYSEArca: ARKK). Disruptive technology is not relegated to certain sectors as it will permeate into all industries in some form or fashion.

ARKK is an actively-managed ETF seeks to provide investors with:

  • Exposure to Innovation: Aims for thematic multi-cap exposure to innovation across sectors.ARK believes the securities held in ARKK present the best risk-reward opportunities from ARK’sinnovation-based themes.
  • Growth Potential: Aims to capture long-term alpha+ with low correlation of relative returns to traditional growth strategies and negative correlation to value strategies.
  • Diversification: Offers a tool for diversification due to little overlap with traditional indices. It can be a complement to traditional value/growth strategies.
  • Research: Combines top-down and bottom-up research in its portfolio management to identify innovative companies and convergence across markets.
  • Cost Effectiveness: Provides a lower cost alternative to mutual funds with true active management in an Exchange Traded Fund (ETF) that invests in rapidly moving themes.

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