Add a Dose of Disruption to Your Portfolio with ETFs

Certainly, technology has come a long way and what was deemed “disruptive” then is standard fare by now. Advisors may already understand the impact of technology in their clients’ portfolios, but may not be aware of the trends that are already disrupting the current tech regime, such as robotics and artificial intelligence–areas where investors can add a dose of disruption to their portfolios via exchange-traded funds (ETFs).

More and more, as the concept of disruption becomes part of societal standards, advisors and those within the financial markets in general who fail to adopt the latest and greatest technology face the possibility of getting left behind.

Don’t Get Left Behind

When such a transformative technology like AI is introduced into a financial industry that can be reticent to change and stuck in its tried-and-true ways, it can present a challenge. However, those who are slow to adapt could be the ones left in the dust.

“It shows you how ETFs continue to evolve like how computers to evolve,” said ETF Trends CEO Tom Lydon during an interview with Yahoo! Finance Live. “If you’re an analyst on Wall Street and you don’t have access to AI, I would be concerned.”

With technology expanding at such a rapid pace, being at the cusp of a major breakthrough seems like a daily occurrence. Advisors can position themselves and their investors to benefit from these breakthroughs in disruptive technology like AI-focused ETFs.

“The bar raises all the time,” Lydon said. “As we continue to evolve technology-wise, it’s great for all of us. If you’re living in the old school, you might definitely be at a disadvantage and if that affects the portfolio performance, people aren’t gong to buy your fund and they’re not going to buy your ETF.”

A Self-Guided Disruptive Option

The disruptive exchange-traded fund (ETF) space continues to grow and investors can now take advantage of self-driving, electric vehicle technology via the iShares Self-Driving EV and Tech ETF (NYSEArca: IDRV).

Per the iShares website, the fund will provide prospective investors with:

  • Access to companies at the forefront of self-driving and electric vehicle (EV) innovation
  • Exposure to global stocks along the full value chain of self-driving and EV industries, across sectors and geographies
  • Seek long-term growth with access to companies that can shape the global economic future

IDRV seeks to track the investment results of an index composed of developed and emerging market companies that may benefit from growth and innovation in and around electric vehicles, battery technologies and autonomous driving technologies. Specifically, it tracks the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index (the “Underlying Index”), which measures the performance of equity securities issued by companies that produce autonomous driving vehicles, electric vehicles, batteries for electric vehicles, or technologies related to such products.

The fund’s top holdings as of April 18 include Apple, Nvidia Corp and Qualcomm Inc. IDRV’s expense ratio comes in at 0.47 percent.

IDRV will invest in domestic and international markets per its prospectus, which states that, “the Underlying Index is composed of equity securities of companies listed in one of 43 developed or emerging market countries that derive a certain specified percentage of their revenue from selected autonomous or electric vehicle-related industries, as defined by IDI.”

Though the technology itself might still be years away, investors can still capitalize on this nascent space that is already seeing major deals taking place. For example, remote driving startup Phantom Auto raised $13.5 million in seed capital, which will be used to expand a logistics business that will utilize sidewalks, warehouses and cargo yards where autonomy and teleoperation are already used.

For more market trends, visit ETF Trends.