Not too many Wall Street analysts have name recognition, but Wedbush's Dan Ives is one of the best-known commentators and AI cheerleaders.
Ives is a frequent guest on CNBC and other financial news outlets, as well as social media, typically wearing a bright-colored jacket and a loud shirt. He's known for his bullish commentary on stocks like Nvidia and Palantir. In fact, Ives recently said that Palantir would hit a market cap of $1 trillion within three years.
Now, the Wedbush analyst has taken the next logical step, creating an exchange-traded fund (ETF). On Wednesday, Wedbush Fund Advisers launched the Dan Ives Wedbush AI Revolution (IVES 0.79%), which trades on the New York Stock Exchange and is based on his picks and research in the artificial intelligence (AI) sector.
The ETF holds 30 stocks, ranging from semiconductors to hyperscalers to cybersecurity, robotics, and other industries. Ives says he is more focused on themes and disruptive impact, rather than valuation, and the ETF features many of the best-known names in AI.
What's in the IVES ETF?
The top 10 holdings in the IVES ETF are as follows:
| Company | Percent of Fund |
|---|---|
| Microsoft | 5.67% |
| Nvidia | 5.37% |
| Broadcom | 5.25% |
| Tesla | 4.65% |
| Taiwan Semiconductor Manufacturing | 4.63% |
| Meta Platforms | 4.61% |
| Amazon | 4.41% |
| Palantir | 4.33% |
| Alphabet | 4.31% |
| Apple | 4.24% |
That list shouldn't come as a big surprise. It includes the "Magnificent Seven" and three other well-known AI stocks, Broadcom, Taiwan Semiconductor, and Palantir. Combined, those stocks make up nearly half of the fund.
Of the remaining stocks, there are several cloud software and cybersecurity names like ServiceNow, Palo Alto Networks, Salesforce, Adobe, Snowflake, and Zscaler.
Among the lesser-followed stocks it owns are Innodata, Elastic, and Pegasystems, which are all relatively small positions in the fund. Each stock is at least 1% of the fund.
As of June 4, the fund had net assets of $26.4 million, and its expense ratio is 0.75%, meaning investors will pay $0.75 out of every $100 invested in the fund to Wedbush to manage it.
Why it matters for investors
The launch of the IVES ETF matters to investors for a few reasons. First, if the fund serves as a big draw, bringing billions into the fund, it will funnel that money to the stocks it holds, helping them rise further.
The fund is also contributing to a greater proliferation of AI ETFs, potentially making it easier to invest in AI stocks.
We're about 2.5 years into the AI boom, which kicked off with the launch of ChatGPT in 2022, and some AI ETFs have been created. However, the formation of AI ETFs has generally lagged in the sector, and many of the funds that purport to track AI stocks don't invest in the household names that investors might expect an AI ETF to hold.
For instance, the Global X Robotics & Artificial Intelligence ETF holds little-known stocks like ABB, Keyence, and Fanuc, which are focused on robotics and automation, among its top five holdings.
The IVES ETF gives investors exposure to the more traditional AI stocks that have become associated with the AI boom.
Image source: Getty Images.
Is the IVES ETF a buy?
If you backtested the IVES ETF over the last year or two, it would have outperformed the S&P 500. The ETF doesn't get credit for that, but the top holdings are many of the stocks that Ives has been publicly bullish on during that time.
If the AI boom continues, the IVES ETF is likely to be a winner as it offers exposure to a range of stocks driving the "AI revolution."
With an expense ratio of 0.75%, the IVES ETF is more expensive than most ETFs, but on par with actively managed funds. For investors looking for easy exposure to a range of AI stocks, investing a bit of money into the IVES ETF is a good way to do it.