Could A.I. Be the Next Frontier for ESG Investing? | ETF Trends

While environmental, social and governance (ESG) investing is already garnering popularity amid an uncertain market landscape, the sector could be getting help from disruptive technology. Artificial intelligence, in particular, could enhance the sector and identify ESG opportunities quickly and efficiently.

“Recent advances in deep learning have moved from benefiting computer vision and image processing to the field of natural language processing,” a Forbes article said. “Identifying and extracting the names of entities (like organizations) and ESG-related terminologies has become significantly more accurate.”

“Additionally, the availability of large knowledge graphs and ontologies that cover such areas as well as commonsense terms means that an AI solution can read millions of documents, extract relevant concepts and collate similar meaning terms into a knowledge representation that is similar to expert knowledge,” the article added. “This allows for the assistance and task improvement for expert researchers as they need to process larger and larger volumes of data.”

An ESG play to consider in the ETF world is the Invesco Cleantech ETF (PZD). The fund is based on the Cleantech Index™.

Cleantech considers a company to be a cleantech company when it derives at least 50% of its revenues or operating profits from cleantech businesses, which are defined as: businesses that provide knowledge-based products or services that add economic value by reducing cost and raising productivity and/or product performance, while reducing the consumption of resources and the negative impact on the environment and public health. The Fund generally invests in all of the securities comprising its Underlying Index in proportion to their weightings in the Underlying Index.

PZD Chart

How to Gain A.I. Exposure

To take advantage of this growing trend, investors might want to give Global X Artificial Intelligence & Technology ETF (AIQ) a look. AIQ seeks to provide investment results that correspond generally to the price and yield performance of the Indxx Artificial Intelligence and Big Data Index.

The fund invests at least 80% of its total assets in the securities of the underlying index, which is designed to track the performance of companies involved in the development and utilization of artificial intelligence and big data.

AIQ offers investors:

  • High Growth Potential: AIQ enables investors to access high growth potential through companies involved in the development and utilization of artificial intelligence and big data technologies.
  • Unconstrained Approach: AIQ’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging theme.
  • ETF Efficiency: In a single trade, AIQ delivers access to dozens of companies with exposure to artificial intelligence and big data theme.

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