Are these the best AI ETFs to watch in Q3 2024?
These Artificial Intelligence ETFs could be the five best to watch next month. These ETFs have been selected for their large market valuations.
Artificial Intelligence (AI) was clearly the investing theme of 2023 — despite elevated interest rates, the big US tech stocks rose sharply in the year — with the ‘magnificent seven’ driving the majority of the gains within both the S&P 500 and the NASDAQ. What's more, heightened interest in the theme has continued into 2024.
The poster child for the AI revolution arguably remains Nvidia, which now sports a gigantic $2.3 trillion valuation. In recent Q4 2024 results, the company saw revenue rise by 265% year-over-year and 22% quarter-on-quarter to a record $22.1 billion, driven by Data Centre revenue which increased by 409% in the year to $18.4 billion.
CEO and founder Jensen Huang enthuses that ‘accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations.’
The AI boom was arguably started by the launch of OpenAI’s chatbot, ChatGPT, but artificial intelligence has long been used across sectors including entertainment, social media, art, retail, security, sport analytics, manufacturing, self-driving cars, healthcare, and warehousing alongside dozens of other sectors.
For perspective, ChatGPT garnered over 1 million users in just five days — and now boasts over 150 million weekly active users. By contrast, it took Netflix three and a half years to hit the same milestone.
But for every OpenAI, there will be dozens of companies that get nowhere close to profitability. This is the reality of entrepreneurialism in a growing space, and can make investing in AI through diversified ETFs a more attractive choice for risk averse investors looking to gain exposure to the theme.
Meanwhile, governments are deciding how to regulate the new technology, with the Council of Europe adopting its first binding international treaty on the use of AI systems, with 46 signature countries.
Best AI ETFs to watch
These ETFs are some of the most well-known AI funds on the market. Past performance is not a guide to future returns.
iShares Robotics and Artificial Intelligence ETF
The iShares Robotics & Artificial Intelligence ETF is a popular Blackrock offering, which invests in developed and emerging companies generating significant sales from robotics and automation. It tracks the STOXX Global Automation and Robotics Index.
The fund is UCITS, SIPP and ISA eligible. It offers a reasonable expense ratio of 0.4%. With 152 holdings, its top 10 investments include Lasertech Corp, Sage Group, Nvidia, ABB, and Garmin. The ETF is also invested in Nvidia rival Advanced Micro Devices.
In common with most AI ETFs, the fund performed poorly in 2022 though rebounded sharply in 2023. This recovery may be set to continue given falling inflation and analyst hopes of a soft landing.
ROBO Global Robotics and Automation Index ETF
The ROBO Global Robotics and Automation UCITS ET was the first ETF of its kind to hit the market in the US. Launched in 2013, it has 77 holdings and boasts $1.3 billion in assets under management. The fund is focused on businesses driving ‘transformative innovations in robotics, automation, and artificial intelligence.’
With holdings across both developed and emerging economics, the ETF contains companies ranging from fabless manufacturing company Keyence, warehouse robotics expert Symbotic, and robotic surgery specialist Intuitive Surgical, maker of the da Vinci surgical robot. Other holdings include gene sequencing stocks Azenta and Illumina, industrial automation specialist Rockwell Automation, and semiconductor specialist Teradyne.
It’s worth noting the higher-than-average expense ratio of 0.95%, though the fund performed well in 2023.
Global X Robotics & Artificial Intelligence ETF
The Global X Robotics & Artificial Intelligence Thematic ETF, established back in 2016, aims to ‘invest in companies that potentially stand to benefit from increased adoption and utilization of robotics and artificial intelligence.’
The ETF holds 43 stocks, including semiconductor champion Nvidia, but also Swiss industrial manufacturer ABB and Japanese robotics company Fanuc, alongside Keyence and Intuitive Surgical. Indeed, these five stocks alone account for nearly 50% of the ETF’s assets — making the fund perhaps less diversified than others on this list.
The also has an elevated expense ratio, of 0.68%. For perspective, a typical NASDAQ 100 index tracker might have an expense ratio of as little as 0.14%.
First Trust Nasdaq Artificial Intelligence & Robotics ETF
The First Trust Nasdaq Artificial Intelligence and Robotics ETF tracks the Nasdaq CTA Artificial and Robotics index, which encompasses businesses engaged in AI and robotics in technology, industrials, and other sectors.
The TF was launched in 2018 and experienced significant uplift during the ultraloose monetary days of the pandemic. Now with 108 holdings, the fund’s top stocks include Illumina, AI-based lender Upstart, automotive sensor company Luminar Technologies and cybersecurity powerhouse Darktrace.
The ETF has performed on par with the S&P 500 since inception, but like most AI ETFs, it does have a higher expense fee at 0.65%.
L&G Artificial Intelligence UCITS ETF
The L&G Artificial Intelligence UCITS ETF is run by a management team which believes that AI is a long-term trend that is ‘radically changing the way we live and work.’
The actively managed ETF picks stocks via a team of AI experts and is UCITS compliant. Significant holdings include the NASDAQ blue chips and ‘magnificent seven’ companies Alphabet, Nvidia and Microsoft.
While the ETF has done very well since its launch in 2019, Legal & General considers its risk profile to be a 7, on a scale where 1 is the lowest and 7 is the highest risk. Further, it has a mildly expensive expense ratio of 0.49%.
How to invest or trade in AI ETFs with us
- Learn more about AI ETFs
- Open an account with us or practise on a demo
- Select your opportunity
- Choose your position size and manage your risk
- Place your deal and monitor your trade
You can either invest in shares directly or trade using spread betting or CFDs to benefit from leverage.
Keep in mind, leverage means you can gain or lose money faster than expected. Because your position size is far greater than your deposit, you could lose more money than you put in. Be aware also that past performance is not an indicator of future returns.
Learn more about the differences between trading and investing here.
Top AI ETFs to watch summed up
These are just a selection of some of the top AI ETFs available. Always do your own research. Past performance is not a guide to future returns.
Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading or investing in shares with us, or open an account to get started today.
*Based on revenue excluding FX (published financial statements, October 2021).
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
