Artificial intelligence (AI) and robotics are anything but new, and investors have had access to related stocks and funds for years. But rapid developments in both technologies have seemingly turned the present into a pivotal point for their respective industries – and for the future prospects of robotics and AI ETFs.
If you take in any financial media at all, you might have heard more about artificial intelligence in the past few weeks than you have in your life. Consider this: S&P 500 companies have mentioned AI 1,072 times so far during their first-quarter earnings calls, according to Bloomberg. Meta Platforms (META), Alphabet (GOOGL), Microsoft (MSFT) and Amazon (AMZN) accounted for 168 of those mentions, says Business Insider.
Among the reasons? The wild growth of AI-powered chatbots. Open AI's ChatGPT chatbot crossed 1 million users just five days after its launch in late November 2022, and reached 100 million monthly active users by January – a feat that UBS said made ChatGPT the fastest-growing consumer application ever.
It's not just ChatGPT, however – the entire AI industry is poised for breakneck growth. According to Grand View Research estimates, the AI industry is expected to surge from about $197 billion in 2023 to $1.8 trillion by 2030, representing a wild compound annual growth rate of 37%. "The continuous research and innovation directed by tech giants are driving the adoption of advanced technologies in industry verticals, such as automotive, healthcare, retail, finance, and manufacturing," Grand View says.
Industrial robotics, while tamer by comparison, is still estimated to swell from $30 billion to more than $60 billion (~11% CAGR) in the same time frame, Grand View Research adds.
No doubt, many investors are increasingly considering chasing that growth – but how you do it matters. You could consider individual AI stocks, though if you make the wrong concentrated bets, you could lose big even if artificial intelligence continues to take off. And you could consider seeking out the best ETFs to buy in the broader tech sector that have some AI exposure, though you risk watering down your exposure to the artificial intelligence and robotics industries.
Perhaps your best bet, then, is to invest in robotics and AI ETFs – and we're going to introduce you to seven such funds today. Each ETF provides its own unique take on these explosive industries – so take note of their differences when determining which fund is your ideal way of investing in the space.
Data is as of May 10.
Global X Artificial Intelligence & Technology ETF
- Assets under management: $152.0 million
- Expenses: 0.68%, or $68 annually for every $10,000 invested
Before we dive into these exchange-traded funds, a quick note. While there's a lot of overlap between the artificial intelligence and robotics worlds, ETFs do differ in how much they focus on one, the other, or both. We'll start out with primarily AI-focused funds, move into mixed robotics and AI ETFs, then finish out with robotics-specific ETFs.
Our first AI-specific ETF is the Global X Artificial Intelligence & Technology ETF (AIQ, $23.98), a roughly five-year-old fund that invests in both companies that are developing AI products and services, as well as companies responsible for hardware that helps facilitate artificial intelligence for big data uses.
The result is a nearly 90-stock portfolio made up of three types of companies:
As you can see, there's a heavy tilt toward mega-cap, beginner-friendly stocks, which will certainly soothe investors worried about investing in less stable niche plays.
But AIQ's makeup also provides us with another reason why plain-vanilla tech ETFs aren't the right way to capture AI and robotics themes.
In addition to the fact that even a tech-sector fund will contain many companies that don't deal in artificial intelligence, that kind of fund also won't capture the other sectors involved in AI. To wit, while AIQ has 63% of its assets in tech stocks, it also has another 14% in communication services stocks, 12% in consumer discretionary, 10% in industrials, and a peppering of healthcare and financials.
One more thing worth noting is that AIQ offers some geographical diversification. Roughly two-thirds of the fund is U.S.-based in nature, but it also holds stocks from 10 other countries, including China (8%), Germany (4%) and South Korea (4%).
ROBO Global Artificial Intelligence ETF
- Assets under management: $25.6 million
- Expenses: 0.68%
Another pure play worth noting is the relatively young ROBO Global Artificial Intelligence ETF (THNQ, $31.23), which was launched in May 2020.
Like with AIQ, THNQ focuses both on companies bringing artificial intelligence to the masses and other businesses, as well as companies whose products make AI possible. Indeed, THNQ actually sorts its portfolio of 70 artificial intelligence stocks into two main buckets:
- Infrastructure (56%), which includes businesses ranging from big data and cloud providers to semiconductor manufacturers
- Applications & Services (44%), which includes e-commerce, consulting services, factory automation, and more
But each of these companies has to check off several boxes to be considered genuinely tethered to AI. Amongst other things, they need to have a high level of investment allocated to AI, tech and revenue leadership, and high AI-revenue purity.
Microsoft, one THNQ holding, is no doubt considered more of an AI leader than it ever has after the recent launching of its ChatGPT-powered Bing AI. Shopify (SHOP) heavily uses artificial intelligence to personalize website experiences. Fair Isaac (FICO) – the name behind FICO credit scores – uses AI to power its credit scoring as well as its predictive analytics offerings.
THNQ's nearly 70-stock portfolio is a little more U.S.-centric at 73% of assets, but shares from Taiwan (5%), China (4%), Israel (4%) and other countries play a role, too.
ROBO Global Robotics & Automation Index ETF
- Assets under management: $1.3 billion
- Expenses: 0.95%
We'll start our look at more "mixed" robotics and AI ETFs with the granddaddy of them all, so to speak: the ROBO Global Robotics & Automation Index ETF (ROBO, $53.25), which launched in October 2013.
As the name would suggest, ROBO is not a pure-play artificial intelligence fund, (nor are most AI ETFs). Instead, the fund targets "global companies that are driving transformative innovations in robotics, automation, and artificial intelligence (RAAI)."
So while AI is part of the game, it's just that: part.
It's not a large part, either. The ROBO ETF, like THNQ, divides its portfolio into two main buckets – Applications (57%) and Technologies (43%), each of which has several subgroups within. The Computing, Processing, & AI sub-group makes up just 14% of the portfolio – though that's tied for second with Healthcare and Logistics Automation, and right behind Manufacturing & Industrial (15%).
You can see how industrial in nature ROBO is through the above and other groupings, such as Business Process Automation, Sensing, Integration and even 3D Printing.
ROBO holds nearly 80 stocks, including robotic surgery firm Intuitive Surgical (ISRG), Swiss automated storage and retrieval specialist Kardex Group and Japanese robotics leader Fanuc (FANUY). In fact, you see plenty of international companies in ROBO – a truly "global" fund with just 44% of assets dedicated to U.S. firms. Japan (21%) looms largest after that, followed by Germany (7%), Taiwan (5%) and roughly a dozen other countries.
Just note that this heavier international exposure comes at a cost – ROBO is the most expensive AI ETF on this list, at 0.95% in annual fees.
Global X Robotics & Artificial Intelligence Thematic ETF
- Assets under management: $1.7 billion
- Expenses: 0.69%
The Global X Robotics & Artificial Intelligence Thematic ETF (BOTZ, $25.57) launched a few years after ROBO, in 2016, but at this point is very much a veteran name in the space. And despite what the name might imply, BOTZ leans more heavily on robotics and industrial automation.
Global X doesn't explicitly break out AI as an industry, though there are clear artificial intelligence connections, including Nvidia and robot-vacuum maker iRobot (IRBT). However, this tight portfolio of under 50 holdings is much thicker in robotics names, including the likes of Swiss industrial technology firm ABB (ABB), Japanese sensor maker Keyence (KYCCF), and American machine vision company Cognex (CGNX).
Again, there's overlap – all three of those industrial-facing firms involve elements of artificial intelligence, but they're less "true" AI plays and more in the robotics camp.
And, as you can tell given the holdings above, BOTZ is another geographically diversified AI ETF. Roughly 45% of its holdings are in the U.S., nearly a third are in Japan and another 11% are Swiss; the rest of the portfolio is scattered across seven other countries.
Also worth noting is BOTZ's high single-stock concentrations at the top of the portfolio. Intuitive Surgical makes up 10% of assets by itself, Nvidia claims another 9%, and ABB and Keyence each account for 8%.
Global X's Robotics & Artificial Intelligence is a strong offering from a leader in thematic ETFs. Though if you're looking for a heavier AI-to-robotics ratio, you'll want to consider the next AI ETFs.
First Trust Nasdaq Artificial Intelligence and Robotics ETF
- Assets under management: $242.3 million
- Expenses: 0.65%
The First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT, $41.15) gives it away in the name: This isn't a pure-play AI ETF, either.
But the pendulum definitely swings more toward artificial intelligence in this ETF, which is decidedly heavier in tech companies. Specifically, about 60% of assets are invested in the technology sector, alongside another 11% in consumer discretionary stocks and 2% in communication services. Still, a good chunk of assets are dedicated toward industrials (21%), and the rest is scattered among healthcare, real estate and consumer staples stocks.
ROBT seeks to invest in three types of companies involved in AI, robotics or automation:
- Enablers (develop the building blocks)
- Engagers (design, create, integrate or deliver via products, software or systems)
- Enhancers (provide services within the ecosystem, but not core to their offerings)
The fund scores companies based on its involvement within one of those categories, then makes up the portfolio with 60% of weight in Engagers, 25% for Enablers and 15% for Enhancers. Stocks are equally weighted within each category, so single-stock risk is minimal – the greatest weighting right now, for instance, is C3.ai (AI) at just 2.85%. Other holdings include process automation software firm UiPath (PATH) and smartphone maker-turned-cybersecurity play BlackBerry (BB).
This is a larger portfolio than most AI ETFs, at nearly 110 stocks. And it too is global in nature, with roughly half its assets invested in foreign stocks from Japan (12%), France (6%), Israel (6%) and a few other countries.
iShares Robotics and Artificial Intelligence Multisector ETF
- Assets under management: $304.0 million
- Expenses: 0.47%
The iShares Robotics and Artificial Intelligence Multisector ETF (IRBO, $29.31) is built similarly to ROBT: While it's not a pure-play AI ETF, it does provide more exposure to the theme than the first two products we highlighted.
IRBO is an index fund that invests in four types of companies they expect to be involved in what they say "could become the fourth industrial revolution":
- Robotics Developers
- Robotics Enablers
- AI Developers
- AI Enablers
Focusing on the latter two, iShares points out a few of examples of what these companies might look like. China internet-services giant Baidu (BIDU), for instance, is an AI Developer that has put together a conversational artificial intelligence system dubbed DuerOS. This technology allows humans to talk with or give commands to their personal devices. It also highlights Splunk (SPLK) as an Enabler, as its software allows customers to analyze big data "for uses including detecting anomalies and predicting outcomes."
The technology sector shines in IRBO at 57% of the portfolio, and communications commands another another quarter of assets. Industrials are a far smaller role here, at just 19% of assets, with the rest in industrial, consumer discretionary, financial and healthcare plays. This AI ETF is geographically diverse, too, with the U.S. at 52% of holdings. Interestingly, China takes the international torch here, at 13% of holdings. Japan's another 11%.
Perhaps most notable about IRBO is its 0.47% expense ratio – tied with our final fund for lowest fees among these robotics and AI funds.
VanEck Robotics ETF
- Assets under management: $1.7 million
- Expenses: 0.47%
Our final ETF is a robotics-specific fund, and a young'un, at that.
The VanEck Robotics ETF (IBOT, $34.95), launched on April 5, 2023, seeks to replicate the performance of the BlueStar Robotics Index, which tracks companies involved in robotics.
"In a time where the economic environment is rapidly shifting, labor shortages growing, and the world trending toward deglobalization, the need to introduce more automation and greater efficiency across a range of industries is increasing," VanEck says.
To capture this industrial automation, IBOT holds companies that generate at least 50% of their revenue from one or more of several subthemes deemed part of the investible universe. These include:
- Robotics manufacturing or industrial automation systems
- Additive manufacturing or 3D printing
- Robotics- or manufacturing-related software and Computer Aided Design (CAD) software
- Machine vision technology
- Robotic surgical systems
- Semiconductor manufacturing systems
Of note: IBOT can also invest up to 20% of its assets in company that offer embedded machine learning chips and generate at least 25% of revenues from the above robotics sub-themes.
Technology is the largest sector at 53%, followed by industrials at 39% and a smattering of consumer discretionary, healthcare and energy stocks. The 63-holding portfolio includes many of the same names that appear in other AI ETFs on this list: Nvidia, Keyence, Siemens (SIEGY) and ABB are among IBOT's top holdings.
And again, you're getting plenty of international exposure by dipping into the robotics and AI space. The U.S. makes up just less than half of assets, followed by a large holding in Japanese stocks (24%), as well as shares in companies from Germany (7%) and Switzerland (7%), among other countries.
Kyle Woodley is the Editor-in-Chief of Young and The Invested, a site dedicated to improving the personal finances and financial literacy of parents and children. He also writes the weekly The Weekend Tea newsletter, which covers both news and analysis about spending, saving, investing, the economy and more.
Kyle was previously the Senior Investing Editor for Kiplinger.com, and the Managing Editor for InvestorPlace.com before that. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, Barchart, The Globe & Mail and the Nasdaq. He also has appeared as a guest on Fox Business Network and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice and Univision. He is a proud graduate of The Ohio State University, where he earned a BA in journalism.
You can check out his thoughts on the markets (and more) at @KyleWoodley.
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