AI Investing – it has taken the 2023, and the ETF market, by storm. AI investing of course includes investing empowered by AI and investing in the sectors boosted by AI. While the former holds significant promise for advisors’ practices, the latter has been a key driver of returns. Some investors may be concerned, however, about how much AI investing has been tied to just one stock, Nvidia (NVDA).
AI Investing and NVDA
NVDA has grown an eye-watering 196.2% YTD. That’s happened in a big year for tech that has resisted rising rates and recessionary concerns. Investors would rightfully have some concerns about the stock perhaps being overbought, or about its 220.71 price-to-earnings ratio. For those who still want to get into AI investing while swerving NVDA, the WisdomTree Artificial Intelligence and Innovation Fund (WTAI) presents an appealing alternative.
WTAI tracks the WisdomTree Artificial Intelligence & Innovation Index (WTAI) which breaks down the AI ecosystem into four groups. Those include semiconductors, AI software, other AI hardware, and innovation. The index focuses on weighting the groups but then mostly equal weights the stocks therein. While that limited its exposure to NVDA when it blossomed, that also means a drop for NVDA will have less of an impact on WTAI overall.
See more: “AI Innovation ETF WTAI Hits Strong Buy Signal”
WTAI itself has benefitted from the AI moment with significant AUM progress. It has risen to $121 million in overall ETF AUM, mostly due to inflows. WTAI has added $92.1 million in the last month alone. The strategy charges 45 basis points to track its index, launching back in 2021. The ETF has returned 34.5% YTD according to YCharts, meanwhile, on top of 27% performance over the last year.
Taken together, WTAI presents one notable option for investors looking at AI ETFs. The sector suggests significant future growth, with WTAI’s approach representing a key option for advisors and investors to consider.
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