Top X Artificial Intelligence (AI) ETFs in 2023

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Top X Artificial Intelligence (AI) ETFs in 2023

You probably interact with artificial intelligence (AI) more often than you think. It’s the algorithm arranging your Netflix (NFLX 0.68%) menu, the software expediting your Amazon (AMZN 1.09%) package, and the brains behind many of the smartphone apps you use every day.

A graphic outlining the 4 types of artificial intelligence (AI): reactive, limited memory, theory of mind, and self-aware.

Image source: Getty Images.

If you’ve used ChatGPT, the OpenAI chatbot that has wowed users by writing code and instantly answering complex questions, you’ve gotten a glimpse into the next frontier in artificial intelligence, known as generative AI, as big tech companies are racing to develop the leading AI chatbot.

If you want to get portfolio exposure to AI companies but don’t want to identify individual AI stocks, you can invest in an AI-focused exchange-traded fund (ETF). AI ETFs provide exposure to a broad range of the best AI companies, eliminating the need to research and choose individual stocks on your own.

Best AI ETFs

Best AI ETFs to buy in 2023

Data source: Yahoo! Finance. Data as of Oct. 30, 2023.
AI ETF Assets Under Management Expense Ratio
Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ) $1.88 billion 0.69%
ROBO Global Robotics and Automation Index ETF (NYSEMKT:ROBO) $1.14 billion 0.95%
iShares Robotics and Artificial Intelligence ETF (NYSEMKT:IRBO) $448.3 million 0.47%
First Trust Nasdaq Artificial Intelligence ETF (NASDAQ:ROBT) $382.6 million 0.65%

Keep reading to learn more about each of these artificial intelligence ETFs.

1. Global X Robotics and Artificial Intelligence ETF

1. Global X Robotics & Artificial Intelligence ETF

Established in 2016, the Global X Robotics & Artificial Intelligence ETF (BOTZ 0.52%) is a fund that seeks to “invest in companies that potentially stand to benefit from increased adoption and utilization of robotics and artificial intelligence.” That includes enterprises working in industrial robotics, automation, non-industrial robots, and autonomous vehicles.

BOTZ currently holds 44 stocks. Its top five holdings, which account for about 46% of the fund’s assets, are:

  • Nvidia (NVDA 2.21%): A semiconductor maker whose chips are used in a wide variety of applications — including autonomous vehicles, virtual computing, and cryptocurrency mining — and are central to many AI technologies.
  • Intuitive Surgical (ISRG 1.67%): Maker of the da Vinci robotic surgical system, which allows for minimally invasive surgeries with precise control.
  • ABB (OTCPK:ABBN.Y): Swiss maker of industrial automation and robotics products for use in utilities and infrastructure.
  • Keyence (KYCCF 0.17%): A Japanese company that makes factory automation products such as sensors and scanners.
  • Fanuc (FANUY -0.14%): Japanese manufacturer of factory automation products, including lasers, robots, and electric injection molding machines.

As the chart below shows, shares of the ETF have underperformed the S&P 500 since its launch in 2016. The share price fell sharply in 2022 in line with the broad selloff in tech stocks.

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BOTZ data by YCharts.

BOTZ offered a modest dividend yield of 0.24% at the time of this writing, but it is better suited as a growth-oriented investment. Its expense ratio of 0.68% is higher than what you’d pay for an index fund, but it’s also reasonable for the fund’s performance history.

2. ROBO Global Robotics and Automation Index ETF

2. ROBO Global Robotics and Automation Index ETF

The ROBO Global Robotics and Automation Index ETF (ROBO 0.19%) is focused on companies driving “transformative innovations in robotics, automation, and artificial intelligence.” ROBO invests in companies that are primarily focused on AI, in addition to cloud computing and other technology companies.

Cloud Computing

Cloud computing is a network of interconnected servers and data centers working together to deliver a service through the Internet.

ROBO holds 78 different stocks, with no single holding accounting for more than 2.2% of the ETF’s value. Its top five holdings comprise only about 9% of the fund’s total value. These five companies include Keyence, the Japanese manufacturer described above, Intuitive Surgical, the maker of the Da Vinci surgical robot, and three others:

  • Airtac International Group (TWSE:1590): A Taiwanese company that makes pneumatic equipment for a wide variety of applications in a range of industries.
  • ServiceNow (NASDAQ:NOW): ServiceNow runs a cloud-based enterprise software platform that is used for IT services and operations management.
  • Hexagon AB (HEXAB SS): Hexagon makes geospatial and industrial enterprise software and equipment. Its technology is used in areas like urban planning, mining, and agriculture.

Since its inception in 2013, ROBO has underperformed the return of the S&P 500, as the chart below shows. It trails the broad-market index, with dividends factored into the return as well. ROBO doesn’t currently pay a dividend, and its expense ratio is 0.95%.

ROBO chart

ROBO data by YCharts.

3. iShares Robotics and Artificial Intelligence ETF

3. iShares Robotics and Artificial Intelligence ETF

The iShares Robotics and Artificial Intelligence ETF (IRBO 0.3%) aims to track the results of an index of developed and emerging market companies that could benefit from the long-term opportunities in robotics companies and artificial intelligence.

IRBO was formed in 2018 and has less than $1 billion of assets under management. With 118 stock holdings, it’s now well diversified. Many of its top holdings also give investors exposure to fast-growing small-cap companies.

The fund’s top five investments, which account for around 8% of IRBO’s assets, are:

  • Meitu (1357.HK): A Chinese holding company that is best known for its portfolio of photo and community apps.
  • Alchip Technologies (3661.TW): A Taiwanese chipmaker known for system-on-a-chip technology. Its products are used in network, storage, and computing devices, as well as HDTVs.
  • Faraday Technology (3035.TW): Another Taiwanese chipmaker known for serving the multimedia, industrial, and the Internet of Things sectors.
  • Microstrategy (MSTR 0.45%): Microstrategy is a software company that provides a range of products that include threat monitoring and analytics. These days, however, the company may be best known for owning billions of dollars in Bitcoin (BTC -1.44%).
  • Via Technologies (2388.TW): Via is another Taiwanese provider of semiconductors and PC chipsets, as well as dashboard cameras, telematic systems, and safety systems.

As you can see from the chart below, IRBO has underperformed the S&P 500 since its founding. The ETF fell in 2022 when tech stocks crashed.

IRBO

IRBO data by YCharts.

IRBO’s expense ratio is competitive at 0.47%, and its dividend yield at the time of this writing was 0.73%. The fund’s performance is likely to be heavily influenced by the overall performance of cloud stocks since it seems more exposed to cloud stocks and chipmakers than AI companies.

Related artificial intelligence topics

4. First Trust Nasdaq AI and Robotics ETF

4. First Trust Nasdaq Artificial Intelligence & Robotics ETF

First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT -0.07%) seeks to track the Nasdaq CTA Artificial and Robotics Index, which is made up of companies engaged in artificial intelligence and robotics in technology, industrials, and other sectors.

The ETF, started in 2018, surged during the pandemic, in part because tech stocks make up more than 60% of its holdings. The ETF currently owns 108 stocks, and the top five include:

  • AeroVironment (AVAV 1.48%): A maker of drones and other unmanned aircraft.
  • Splunk (SPLK 0.12%): A cloud software company known for its observability platform.
  • Synopsys (SNPS 1.99%): A maker of design automation used for testing semiconductors.
  • Cadence Design Systems (CDNS 2.04%): A diversified technology company whose products are used for designing semiconductors and verifying that they work.
  • Dassault Systemes (DASTY 0.94%): Offers 3D printing products and solutions and circuit board design technology.

The First Trust ETF offers an expense ratio of 0.65% and a dividend yield of 0.35%. Although its trading history is relatively short, you can see from the chart below that its performance is similar to the S&P 500 overall.

ROBT Ychart

^SPX data by YCharts.

Should you buy?

Should you buy AI ETFs?

The best way to decide which ETF to buy is to consider which stocks a fund holds and how many of them are true AI companies. A fund’s expense ratio, dividend yield, and past performance are also important. You can opt to invest in a basket of all four of these artificial intelligence ETFs to maximize your diversification.

Over time, artificial intelligence, like chatbots, will only grow smarter and play a greater role in our daily lives. Already, AI represents a global market worth hundreds of billions of dollars, and its wide range of practical applications includes smartphone face recognition, predictive algorithms in internet search, smart home devices, and autonomous vehicles. So pay attention to the AI market now, and you may find yourself reaping the rewards in years to come.

Frequently asked questions

Which ETF is best for AI?

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AI investors have a number of options in ETFs. The best-known of the AI ETFs above is BOTZ, which holds a number of well-known AI stocks including Nvidia and Intuitive Surgical.

AI investors may also want to consider an ETF that tracks the Nasdaq-100 like the Invesco QQQ ETF (Nasdaq: QQQ) since big tech companies with exposure to AI make up almost half of the fund.

Does Vanguard have an AI ETF?

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Vanguard does not currently offer an AI-focused ETF. However, the asset manager offers an information technology ETF that includes a number of AI stocks.

Is there an ETF managed by AI?

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There are a number of ETFs that are managed with the help of AI. Those include the Qraft AI Enhanced U.S. Next Level ETF, and WisdomTree U.S. AI Enhanced Value Fund. WisdomTree also offers an International AI Enhanced Value Fund.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon and Netflix. The Motley Fool has positions in and recommends Abb, AeroVironment, Amazon, Bitcoin, Cadence Design Systems, Intuitive Surgical, Netflix, Nvidia, Splunk, and Synopsys. The Motley Fool recommends Dassault Systèmes Se and Fanuc. The Motley Fool has a disclosure policy.