Artificial intelligence and cryptocurrency have been rewarding investment themes in recent years. For instance, chipmaker Nvidia has seen its stock price increase more than 840% since December 2022, and Bitcoin has returned more than 520% during the same period.
Several industry experts expect that momentum to carry into the coming years. Indeed, artificial intelligence may be the most impactful technological advancement since the invention of the lightbulb in the 1800s, and spot Bitcoin ETFs could unlock unprecedented demand for Bitcoin among institutional investors.
Consequently, I think those stock market themes create once-in-a-lifetime buying opportunities for patient investors, and two exchange-traded funds (ETFs) make it easy to participate: The Vanguard S&P 500 Growth ETF (VOOG 1.58%) and iShares Bitcoin Trust (IBIT 4.43%). Read on to learn more.
NYSEMKT: VOOG
Key Data Points
The Vanguard S&P 500 Growth ETF provides exposure to artificial intelligence stocks poised to benefit from technological innovation
Analysts at JPMorgan, Accenture, McKinsey, Goldman Sachs, and PwC estimate artificial intelligence (AI) will boost global gross domestic product (GDP) between 8% and 21% over the next decade. The last comparable technological innovations were the personal computer and the internet, but JPMorgan thinks AI will ultimately create more economic value.
In the near term, Dan Ives at Wedbush Securities during a recent CNBC interview predicted technology stocks would return 25% in 2025 as strong revenue growth starts to justify heavy investments in AI infrastructure. Investors can position their portfolios to benefit by purchasing shares of the Vanguard S&P 500 Growth ETF, a fund that tracks 209 growth stocks in the S&P 500.
Importantly, 40% of the Vanguard S&P 500 Growth ETF is invested in the technology sector, and many member companies are well positioned to monetize AI. The five largest positions in the ETF are listed by weight below:
- Nvidia: 12.7%
- Alphabet: 7.7%
- Apple: 6.7%
- Microsoft: 6.2%
- Meta Platforms: 4.9%
The Vanguard S&P 500 Growth ETF returned 76% in the last two years, a period that roughly corresponds with widespread interest in generative AI that followed the launch of ChatGPT. Meanwhile, the S&P 500 returned 55% during the same period. I expect the Vanguard ETF to continue outperforming as AI drives growth stocks, especially those in the technology sector, higher in the coming years.
The last item of consequence is the expense ratio. The Vanguard S&P 500 Growth ETF has a reasonable expense ratio of 0.1%, meaning shareholders will pay $10 annually on every $10,000 invested in the fund. Comparatively, the expense ratio on similar funds is 0.94%, according to Vanguard.
NASDAQ: IBIT
Key Data Points
The iShares Bitcoin Trust provides exposure to a unique asset poised for widespread institutional adoption
MicroStrategy Chairman Michael Saylor recently told CNBC that Bitcoin is unique because it is the only scarce commodity companies can carry on their balance sheets that has regularly beat the S&P 500. Consequently, he believes Bitcoin will become an increasingly important institutional investment in the years ahead.
While buying Bitcoin has traditionally been complicated by cryptocurrency exchanges and blockchain wallets, spot Bitcoin ETFs like the iShares Bitcoin Trust eliminate those sources of friction, creating a once-in-a-lifetime opportunity for investors. Never before has it been so easy for institutions to add Bitcoin to their portfolios.
Additionally, the incoming presidential administration will likely be much friendlier toward cryptocurrency than past administrations. Donald Trump during his campaign proposed creating a strategic Bitcoin reserve, and he has nominated cryptocurrency-supporter Paul Atkins as chairman of the Securities and Exchange Commission (SEC).
Those decisions should further legitimize Bitcoin among institutional investors, and that could lead to a huge increase in its price. That's because institutional investors have about $120 trillion in assets, and even a small fraction of that sum allocated to Bitcoin could have a substantial impact on its value.
There is already evidence of that thesis in action. Spot Bitcoin ETFs earned regulatory approval in early 2024, which led to "the most successful ETF launch ever," according to Bernstein analyst Gautam Chhugani. And institutional investors are adopting spot Bitcoin ETFs faster than any ETF in history, according to Bitwise CIO Matt Hougan.
The iShares Bitcoin Trust charges 0.25% annually, which means shareholders will pay $25 per year on every $10,000 invested in the fund. Comparatively, Coinbase charges between 0.4% and 0.6% for transactions under $10,000. And not only are the exchange fees higher, but investors also pay twice, once when they buy and again when they sell. That makes the iShares Bitcoin Trust a more attractive option in my opinion.
