One way to invest in artificial intelligence (AI) is to pick a few companies that you think will likely be the biggest winners in the future. That's easier said than done.
Another way to invest in AI is to buy one or more broad baskets of AI stocks using exchange-traded funds (ETFs). Sure, you'll still have to decide between funds. However, there are far fewer AI ETFs to choose from than there are individual AI stocks. Here are three great AI-focused funds to fuel your portfolio.
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1. Global X Artificial Intelligence & Technology ETF
The Global X Artificial Intelligence & Technology ETF (AIQ 0.10%) attempts to track the performance of the Indxx Artificial Intelligence & Big Data Index. Mirae Asset Securities launched the fund on May 11, 2018, making it one of the older pure-play AI ETFs.
This ETF's net assets under management currently total $5.38 billion. That makes the Global X Artificial Intelligence & Technology ETF one of the largest ETFs specializing in AI stocks.
You'll gain broad exposure to AI with this ETF. Its portfolio includes 88 stocks. The top five holdings for the ETF are database and cloud giant Oracle, Chinese technology leader Alibaba Group, Google parent Alphabet, electric vehicle and robot maker Tesla, and huge South Korean technology company Samsung Electronics.
The fund's annual expense ratio is 0.68%. However, that has been a low price to pay for a stellar performance. Since its inception, the Global X Artificial Intelligence & Technology ETF has delivered an average annual return of 16.6%. Over the past year, the ETF has soared by almost 23%.
2. iShares A.I. Innovation and Tech Active ETF
You aren't limited to AI-focused index ETFs. The iShares A.I. Innovation and Tech Active ETF (BAI 0.26%) is an actively managed fund run by financial services giant BlackRock. The ETF's investment managers, Tony Kim and Reid Menge, research global AI and technology stocks across all market caps.
The iShares A.I. Innovation and Tech Active ETF owns 39 stocks. Its top holdings include GPU maker Nvidia, semiconductor and infrastructure software company Broadcom, Facebook and Instagram parent Meta Platforms, cloud and software giant Microsoft, and Oracle.
This ETF is even larger than the Global X Artificial Intelligence & Technology ETF, with its net assets of $5.8 billion. It hasn't been around as long, though: BlackRock launched the iShares A.I. Innovation and Tech Active ETF on Oct. 21, 2024.
Its net expense ratio of 0.55% is quite competitive against most AI ETFs. One downside of the fund, however, is that it hasn't been available long enough to establish a performance track record to compare against other ETFs.
3. ROBO Global Robotics & Automation ETF
One of the most exciting applications for AI is in robotics. The ROBO Global Robotics & Automation Index ETF (ROBO 0.34%) provides a way to invest in companies across the world that are pioneering innovations in robotics, automation, and AI.
This ETF's portfolio features 77 stocks. Its top holdings include Japanese precision controls maker Harmonic Drive Systems, robotic warehouse automation leader Symbotic, industrial robot developer Fanuc, AI-powered robot maker Teradyne, and Taiwanese electronics giant Hon Hai Precision Industry Company, which is commonly known as Foxconn.
ROBO Global and Exchange Traded Concepts launched the ROBO Global Robotics & Automation Index ETF on Oct. 21, 2013. Since then, the fund has generated an average annual return of roughly 8.4%. Over the last year, it's been an even bigger winner, with a gain of around 15.6%.
You'll have to pay a little more to own this ETF than the other two funds on this list, though. The ROBO Global Robotics & Automation Index ETF's annual expense ratio is 0.95%.
