Maximize Your Investments with A.I. ETFs in 2023
Table of Contents:
- Introduction
- Global X Robotics & Artificial Intelligence ETF (BOTZ)
- Overview
- Performance Evaluation
- Top Holdings
- Pros and Cons
- ROBO Global Robotics and Automation Index ETF
- Overview
- Performance Evaluation
- Top Holdings
- Pros and Cons
- iShares Robotics and Artificial Intelligence ETF
- Overview
- Performance Evaluation
- Top Holdings
- Pros and Cons
- First Trust Nasdaq Artificial Intelligence and Robotics ETF
- Overview
- Performance Evaluation
- Top Holdings
- Pros and Cons
- Conclusion
- FAQs
1. Introduction
The global race for supremacy in artificial intelligence (A.I.) has begun, and investors are seeking ways to profit from this rapidly growing industry. This article will provide an in-depth analysis of the four biggest A.I.-focused exchange-traded funds (ETFs). We'll examine their performance, top holdings, pros, and cons, to help You make informed investment decisions.
2. Global X Robotics & Artificial Intelligence ETF (BOTZ)
- Overview: The Global X Robotics & Artificial Intelligence ETF (BOTZ) was established in 2016 and invests in companies that stand to benefit from the increased use of robotics and A.I. This includes industrial robotics, automation, non-industrial robots, and autonomous vehicles.
- Performance Evaluation: Over the past five years, BOTZ has outperformed the S&P 500 index with an impressive 40% return. It is considered better suited for growth-oriented investments with a slightly higher expense ratio.
- Top Holdings: The ETF holds 37 stocks, with its top five holdings accounting for approximately 40% of its assets. These include Upstart Holdings, Nvidia, Intuitive Surgical, Keyence, and ABB.
- Pros and Cons: Despite its strong performance, BOTZ may not be suitable for all investors due to its focus on growth stocks. The slightly higher expense ratio should also be taken into consideration.
3. ROBO Global Robotics and Automation Index ETF
- Overview: The ROBO Global Robotics and Automation Index ETF focuses on companies driving advancements in A.I., robotics, and automation. It holds 83 stocks, with its top five holdings making up only 9% of the total value.
- Performance Evaluation: Since its inception in 2013, ROBO has matched the return of the S&P 500 index. However, its performance has not been exceptional over the past five years, as indicated by the 5-year Chart.
- Top Holdings: The ETF's top five investments include iRhythm Technologies, Brooks Automation, Stratasys, Intuitive Surgical, and Kardex Holding.
- Pros and Cons: While ROBO offers a modest dividend yield and a slightly higher expense ratio, its performance compared to the S&P 500 may not justify the additional costs.
4. iShares Robotics and Artificial Intelligence ETF
- Overview: The iShares Robotics and Artificial Intelligence ETF aims to track the performance of companies that could benefit from long-term opportunities in robotics and A.I. It has a well-diversified portfolio of 104 stocks, including fast-growing small-cap companies.
- Performance Evaluation: IRBO has outperformed the S&P 500 index, with an 86% increase compared to the index's 58% increase. It has a competitive expense ratio and a healthy dividend yield.
- Top Holdings: Ambarella, Nemetschek, Hubspot, Alchip Technologies, and Splunk are among the ETF's top five holdings, accounting for 6% of its assets.
- Pros and Cons: While IRBO has shown strong performance, investors should carefully evaluate the risks associated with small-cap companies in their investment decision.
5. First Trust Nasdaq Artificial Intelligence and Robotics ETF
- Overview: The First Trust Nasdaq Artificial Intelligence and Robotics ETF tracks the Nasdaq CTA Artificial and Robotics Index, including companies involved in A.I. and robotics across multiple sectors.
- Performance Evaluation: Although established in 2018 and benefiting from tech stocks during the pandemic, the ETF's performance has not been substantial compared to the S&P 500 index.
- Top Holdings: Ambarella, Gentex Corporation, Dynatrace, Elbit Systems, and Cadence Design Systems are among the ETF's top holdings.
- Pros and Cons: Investors should carefully consider whether the slightly higher expense ratio of this ETF justifies the performance compared to the S&P 500 index.
6. Conclusion
In conclusion, investing in A.I.-focused ETFs can be a savvy move to gain exposure to this rapidly growing industry. However, it is essential to evaluate the performance, top holdings, and associated risks before making any investment decisions. Among the four ETFs discussed, the Global X Robotics & Artificial Intelligence ETF (BOTZ) stands out for its impressive performance, longer history, and lower expense ratio.
7. FAQs
Q1. Are A.I.-focused ETFs suitable for all investors?
A1. A.I.-focused ETFs, such as BOTZ, may not be suitable for all investors due to their focus on growth stocks and associated risks. It is advisable to consult a financial advisor before investing.
Q2. What is the performance of the iShares Robotics and Artificial Intelligence ETF compared to the S&P 500 index?
A2. The iShares Robotics and Artificial Intelligence ETF (IRBO) has outperformed the S&P 500 index with an 86% increase compared to the index's 58% increase.
Q3. What are the top holdings of the ROBO Global Robotics and Automation Index ETF?
A3. The top holdings of the ROBO ETF include iRhythm Technologies, Brooks Automation, Stratasys, Intuitive Surgical, and Kardex Holding.
Q4. Which A.I.-focused ETF has the lowest expense ratio?
A4. The Global X Robotics & Artificial Intelligence ETF (BOTZ) has a slightly lower expense ratio compared to the other A.I.-focused ETFs discussed.
Q5. What should investors consider before investing in A.I.-focused ETFs?
A5. Investors should consider factors such as performance, top holdings, expense ratios, associated risks, and individual investment goals before investing in A.I.-focused ETFs. Consulting a financial advisor is recommended.