AI is likely the hottest market available to investors right now—at an estimated size of more than $243 billion this year, it’s estimated More than triple by 2030. And yet, as a growing industry, the AI space is populated by both tech giants using their weight to influence and Much younger, more agile newcomers Race to develop essential technologies. It is, unfortunately, home to a surprisingly large number of firms trying to capitalize on the rapid growth of AI in general, without contributing much to the industry.
For investors, AI presents a huge opportunity but also a challenge—how does one identify the top Up-and-coming AI stocks Which has yet to reach its full potential? With many investors wary that there could be an AI bubble similar to the dot-com boom nearly 25 years ago, the rewards and risks are equally high.
For investors looking to hedge their bets through diversification, AI exchange-traded funds (ETFs) may represent a good opportunity. These may include funds that are specifically focused on AI companies, e.g Global X Robotics and Artificial Intelligence ETF Nasdaq: BotzAs well as those related to the wider technical field, eg iShares Expanded Technology Sector ETF NYSEARCA: IGMOr for a critical component used in AI applications, eg Direction Daily Semiconductor Bull 3x Share ETF NYSEARCA: SOXL.
Global X Robotics and Artificial Intelligence ETF: A price-targeted portfolio
Global X Robotics and Artificial Intelligence Thematic ETF Today
01/17/2025 to 04:00 PM Eastern
- 52-week range
- $26.60
▼
$34.26
- Dividend yield
- 0.12%
- Property under management
- $2.62 billion
BOTZ is one of a growing number of ETFs specifically focused on AI and robotics companies. For its asset base of $2.6 billion, its 1-month average trading volume is in the mid-600,000 range as of January 15, 2025. BOTZ is a focus fund, with fewer than 50 holdings, although apart from three or four major players who occupy 10% or more of each portfolio, the assets are evenly distributed among other names.
The fund will appeal mostly to investors looking for the diversification possible given that both AI and robotics are names, meaning some companies are not active participants in the AI space. Special Focus comes with fairly high fees, as BOTZ’s expense ratio is 0.68%.
iShares Expanded Tech Sector ETF: Strong performance, broad exposure
iShares Expanded Tech Sector ETF Today
01/17/2025 to 04:10 PM Eastern
- 52-week range
- $75.66
▼
$107.19
- Dividend yield
- 1.77%
- Property under management
- $5.85 billion
IGM’s nearly 300 holdings make it a comprehensive tech fund—although it doesn’t have an AI focus, many of the companies represented in its portfolio are involved in AI. The fund’s $5.7 billion in assets reflects its broad appeal, and its fee of 0.41% is quite competitive, especially against AI-specific funds.
As of January 15, 2025, it has a one-year performance record of 36.8%, slightly outperforming the broader market. One thing that investors can keep in mind is that IGM holds Liked by all major tech players Apple Inc. NASDAQ: AAPL And Microsoft Corporation NASDAQ: MSFT EssentiallySometimes in a large enough percentage of invested assets, that means investors who own shares of those companies can unwittingly dilute the balance of their portfolios.
Direction Daily Semiconductor Bull 3x Share ETF: Leveraged Play for Compound Returns
Direction Daily Semiconductor Bull 3x shares today
01/17/2025 to 04:10 PM Eastern
- 52-week range
- $23.50
▼
$70.08
- Dividend yield
- 0.31%
- Property under management
- $10.10 billion
SOXL is another fund that is not specifically focused on AI companies but is closely linked to the industry.
By offering 3x long exposure to an index of semiconductor stocks, this fund offers a higher opportunity to increase daily returns when the semiconductor space performs well.
Semiconductors have grown due to strong demand from AI and other corners of the tech space. However, the use of leverage means that active traders with a high tolerance for risk work best with this fund.
Beware of the AI name
As funds like IGM and SOXL show, it’s possible to get strong exposure to a wide swath of the AI space without investing in ETFs expressly named after the AI industry. Just as there are companies trying to woo investors by hinting at AI in their names and content, without actually doing any research, so too here are ETFs aiming to capitalize on the trend. Look at a potential AI fund’s holdings and compare them to traditional tech-focused funds such as Technology Select Sector SPDR Fund NYSEARCA: XLK-If there is enough overlap, it may be possible to get similar AI exposure with a common fund that has a lower expense ratio.
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