With advancements in machine learning and automation continuing to change how we live and work, investors and advisors alike continue to show interest in the rapidly growing field of artificial intelligence (AI). As a result, many are looking to capitalize on this trend by investing in ETFs that focus on AI companies. In this article, we will cover the top 5 ETFs to consider when investing in this sector based on their YTD performance.
Top Performing AI ETFs
Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 2X Shares (UBOT) – With a YTD return of 86.27% and $32 billion in assets under management (AUM), UBOT is a leveraged ETF that seeks to provide 2x the daily performance of the Robotics, Artificial Intelligence & Automation Index. While its YTD return is impressive, it’s important to note that leveraged funds tend to make big moves because they can multiply a reference index’s returns by two to three times. Their greater volatility makes them riskier than non-leveraged funds. However, UBOT’s focus on AI and automation drove impressive performance this year.
Spear Alpha ETF (SPRX) – With a YTD return of 53.09% and $6 billion in AUM, SPRX is a non-leveraged actively managed ETF that invests in companies involved in the development and deployment of artificial intelligence as well other innovative tech companies. While its focus is on technological innovation rather than AI specifically, the fund’s inclusion of such companies has contributed to its strong performance this year.
Global X Robotics & Artificial Intelligence ETF (BOTZ) – With a YTD return of 39.56% and $2.3 billion in AUM, BOTZ is a non-leveraged ETF that invests in companies involved in the development and use of robotics and artificial intelligence. Its portfolio includes companies such as NVIDIA, Intuitive Surgical, and Fanuc. With a focus solely on AI and robotics, BOTZ has performed well this year as the demand for automation continues to grow.
iShares U.S. Technology ETF (IYW) – With a YTD return of 40.77% and $12.2 billion in AUM, IYW is a non-leveraged ETF that tracks the performance of the Dow Jones U.S. Technology Index. Its portfolio includes companies such as Apple, Microsoft, and NVIDIA Corporation. Although it targets the broad technology industry, the fund’s inclusion of tech giants involved in AI has boosted its performance this year.
Invesco NASDAQ Internet ETF (PNQI) – With a YTD return of 36.46% and $560 million in AUM, PNQI is a non-leveraged ETF that tracks the performance of the NASDAQ Internet Index. Its portfolio includes companies such as Amazon, Meta, and Alphabet. Much like IYW, its focus is not solely on AI, but the fund’s inclusion of tech giants means it offers exposure to some of the biggest players in the AI space.
Should You Invest?
While UBOT and BOTZ are the only funds in this list that focus specifically on artificial intelligence, the other ETFs also invest in the broader tech sector. It’s important to consider the specific focus of each ETF when making investment decisions.
Investing in AI can be a great way to diversify your portfolio and capitalize on market trends. However, it’s important to do your research and consider the risks associated with each investment. Leveraged funds, such as UBOT, can offer higher returns but also come with greater risk. Non-leveraged funds, such as SPRX, BOTZ, IYW, and PNQI, may offer more stable returns but may not have the same potential for high growth. Pure play funds like BOTZ can also come with risks because they are a higher-conviction bet on the performance of a particular industry rather than providing broad exposure to an entire sector.
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