Asset Managers Capitalize on AI Boom with New ETF Offerings

Asset Managers Introduce AI-Themed ETFs to Capture Booming Market Trends

New AI-Themed ETFs Enter Market as Asset Managers Tap into AI Investment Wave The buzz around artificial intelligence has spurred asset managers to launch a wave of AI-focused exchange-traded funds (ETFs), providing investors with fresh opportunities to tap into the growing enthusiasm for AI technology. This year alone, more than one-third of the two dozen ETFs featuring AI in their name were introduced, according to Morningstar data, reflecting an industry eager to meet demand for targeted investments in a rapidly evolving sector.

Asset managers roll out new ETFs to tap in to AI buzz

(Reuters) - Exchange-traded funds focused on artificial intelligence are proliferating as asset managers offer investors new ways to tap in to the market enthusiasm for AI, even while it remains unclear which companies will emerge as the long-term winners from the latest technology revolution. More than one-third of the two dozen ETFs that include artificial intelligence or AI in their name have been launched in 2024 alone, according to data from Morningstar. In the past week, three more joined their ranks, including a cloud computing ETF rebranded and revamped to specifically target AI. The AI ETF group now has assets of $4.5 billion, drawing it closer to the $5.5 billion nuclear power-themed ETF universe, and pushing it well above the cannabis sector, with $1.37 billion in assets. "I'm not surprised their ranks are multiplying," said Daniel Sotiroff, senior analyst at Morningstar. "This is a fast-growing, fast-moving industry, and it is easy to hope that you could end up making a lot of money in a short period of time." The 200%-plus stock gain by chipmaker Nvidia - AI's poster child - over the last 12 months likely just reaffirms that confidence, Sotiroff said. Beyond Nvidia, AI is likely to produce a larger and broader swath of beneficiaries in the future, said Tony Kim, head of the fundamental equities technology group at BlackRock. Kim is the manager of the two new AI-themed ETFs launched by BlackRock on Tuesday, the iShares A.I. Innovation and Tech Active ETF and the iShares Technology Opportunities Active ETF. The first of the firm's AI products, the $630 million iShares Future AI & Tech ETF, launched in 2018, currently trades just below a 52-week high recorded on Oct. 14. While its initial AI product is linked to an index, the two new funds are actively managed and designed to capture emerging opportunities within AI, according to Jay Jacobs, head of active and thematic ETFs at BlackRock. "The AI market is going to change dramatically," said Kim. "What you think it is today, isn't going to be what it becomes tomorrow or next year or in a few years." ARMS RACE BofA Securities market analysts Ohsung Kwon and Savita Subramanian said in a recent report they believe there is "an AI arms race" under way among giant technology companies like Microsoft and Amazon.com. They calculate that capital spending this year from four megacaps making big AI bets will total $206 billion, up 40% over 2023. Meanwhile, capital spending by the other 496 companies in the S&P 500 will dip slightly, they project. Venture capital firms also are directing as much as $79.2 billion in funding to AI startups by the end of the year, 27% above 2023 levels, according to an estimate from venture firm Accel. That means that 40 cents of every dollar invested by VC firms will go to an AI company. Of course, investing in an AI-themed ETF does not guarantee market outperformance. The largest of the AI funds, the Global X Artificial Intelligence & Technology ETF, is up about 20% so far this year, against a 22% rise for the benchmark S&P 500. Amplify ETFs earlier this month rebranded an existing cloud-computing ETF to reflect a new focus on the emerging technology, naming it the Amplify Bloomberg AI Value Chain ETF. "Now, we're trying to get exposure to the cloud with a specific AI tilt," said Nathan Miller, vice president of product development at Amplify. The long-term goal, he added, is to be ready to profit if and when all that capital spending on AI starts to show up in earnings, and be ahead of the curve in identifying new opportunities. "Like every ETF firm out there, we are trying to offer investors something differentiated," Miller said. (Reporting by Suzanne McGee in Providence, Rhode Island; Editing by Lewis Krauskopf and Matthew Lewis)

More Than A Third Of AI-Based ETFs Were Launched In 2024, Focusing On Nvidia, Microsoft, Apple And Meta, Among Others: Here's How Some Of Them Have Performed This Year So Far - Apple (NASDAQ:AAPL), Global X Artificial Intelligence & Technology ETF (NASDAQ:AIQ)

AI-themed exchange-traded funds (ETFs) are witnessing a significant surge as asset managers capitalize on the growing enthusiasm surrounding artificial intelligence. This year, over one-third of the two dozen AI-focused ETFs were launched, according to Morningstar. What Happened: In the past week alone, three new ETFs have entered the AI sector, including one that was rebranded to specifically focus on artificial intelligence, Reuters reported on Monday. The total assets of AI ETFs have now reached $4.5 billion, approaching the $5.5 billion held by nuclear power-themed ETFs and surpassing the $1.37 billion in the cannabis sector. Daniel Sotiroff, a senior analyst at Morningstar, remarked on the trend, stating, "I'm not surprised their ranks are multiplying." He emphasized that the industry's rapid pace attracts investors eager for quick returns, according to the report. See Also: November Interest Rate Cut Almost A Done Deal As Blackout Begins: 10 Stocks Surging The Most Since Fed's Last Decision As per Benzinga Pro data, here are how some of the AI-based ETFs performed over the past year: Global X Robotics and Artificial Intelligence ETF BOTZ: BOTZ, currently with net assets worth $2.51 billion and NAV of $31.59, climbed 40.39%. Its top AI-related holdings include Nvidia Corp. NVDA and biotech firm Intuitive Surgical Inc ISRG. Global X Artificial Intelligence & Technology ETF AIQ: AIQ, which has $2.27 billion in net assets and $37.36 NAV, increased by 43.64%. Oracle Corp. ORCL, Cisco Systems Inc. CSCO, and Meta Platforms META are some of its top AI-related holdings. iShares US Technology ETF IYW: IYW gained 50.72% in the past year. The ETF has an NAV of $155.42 and $19.24 billion in net assets. It also gives exposure to tech stocks like Apple Inc. AAPL, Nvidia, Microsoft Corp. MSFT, and Broadcom Inc. AVGO which have witnessed stellar growth, thanks to AI buzz. Fidelity MSCI Information Technology Index ETF FTEC: The ETF witnessed a 48.55% growth while exposing to stocks like Apple, Microsoft, Nvidia, Alphabet and Broadcom. It holds $12.05 billion in net assets. Why It Matters: The surge in AI-themed ETFs is part of a broader trend driven by the increasing demand for artificial intelligence technologies. Recently, Nvidia briefly surpassed Apple to become the world's most valuable company, fueled by the demand for its AI supercomputing chips. This highlights the growing importance of AI in the tech sector. Moreover, the International Monetary Fund (IMF) has noted AI's potential to enhance market efficiency but warns of increased volatility and cyber threats. The IMF's Global Financial Stability Report suggests that AI-driven trading could revolutionize markets, although its adoption remains limited. The report also cautions about the potential shift of investments to less regulated nonbank financial intermediaries, complicating market oversight. Read Next: Five US Banks Face Billions In Losses As Silver's Price Spike Hits Short Sellers Hard: Report Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. Photo courtesy: Unsplash Market News and Data brought to you by Benzinga APIs

BlackRock taps into AI frenzy with two new ETFs

(Reuters) - Asset management giant BlackRock on Tuesday launched two new exchange-traded funds (ETFs) aimed at giving investors exposure to the booming market for artificial intelligence. Generative AI, designed to create human-like interactions by processing vast amounts of data, has taken the world by storm and is expected to be integrated into virtually all industries in the coming years from technology to financial services. "As an investing theme, BlackRock views AI as a mega force with broad investing implications both now and in the long term," the world's largest asset manager said. Asset managers have been rolling out thematic ETFs to capitalize on the popularity of certain themes, sectors or trends, unlike traditional products that track broad market indexes. Demand for these products, however, has been mixed in recent months as investors have been opting for funds linked to stock market benchmarks, which are hovering near record highs. BlackRock's iShares A.I. Innovation and Tech Active ETF will invest in global AI and technology stocks across market capitalizations. Its iShares Technology Opportunities Active ETF shares a similar investment objective, aiming for long-term capital appreciation by investing in global technology companies across sectors like semiconductors, software and hardware, among others. "These active ETFs can help investors seize outsized and overlooked investment opportunities across the full stack of AI and advanced technologies," said Tony Kim, BlackRock's head of the fundamental equities technology group. Earlier this month, the asset manager beat Wall Street estimates for third-quarter profit and its assets under management (AUM) hit a record high as a U.S. stock market rally boosted inflows. As of Sept 30, its iShares business - with over 1400 ETFs - had $4.2 trillion in AUM. (Reporting by Manya Saini in Bengaluru; Editing by Anil D'Silva)

BlackRock taps into AI frenzy with two new ETFs

Oct 22 (Reuters) - Asset management giant BlackRock (BLK.N), opens new tab on Tuesday launched two new exchange-traded funds (ETFs) aimed at giving investors exposure to the booming market for artificial intelligence. Generative AI, designed to create human-like interactions by processing vast amounts of data, has taken the world by storm and is expected to be integrated into virtually all industries in the coming years from technology to financial services. Advertisement · Scroll to continue "As an investing theme, BlackRock views AI as a mega force with broad investing implications both now and in the long term," the world's largest asset manager said. Asset managers have been rolling out thematic ETFs to capitalize on the popularity of certain themes, sectors or trends, unlike traditional products that track broad market indexes. Demand for these products, however, has been mixed in recent months as investors have been opting for funds linked to stock market benchmarks, which are hovering near record highs. Advertisement · Scroll to continue BlackRock's iShares A.I. Innovation and Tech Active ETF will invest in global AI and technology stocks across market capitalizations. Its iShares Technology Opportunities Active ETF shares a similar investment objective, aiming for long-term capital appreciation by investing in global technology companies across sectors like semiconductors, software and hardware, among others. "These active ETFs can help investors seize outsized and overlooked investment opportunities across the full stack of AI and advanced technologies," said Tony Kim, BlackRock's head of the fundamental equities technology group. Earlier this month, the asset manager beat Wall Street estimates for third-quarter profit and its assets under management (AUM) hit a record high as a U.S. stock market rally boosted inflows. As of Sept 30, its iShares business - with over 1400 ETFs - had $4.2 trillion in AUM. Reporting by Manya Saini in Bengaluru; Editing by Anil D'Silva Our Standards: The Thomson Reuters Trust Principles., opens new tab

BlackRock unveils active fund that aims to track changing AI trade over time

The world's largest asset manager is betting that the best way to give investors exposure to the booming artificial intelligence trade is through a fund that is narrow and nimble. Tony Kim, head of the fundamental equities technology group at BlackRock , is helming a new AI-focused fund launching on Tuesday. Kim's theory about the development of AI is that it is a growing "stack" of opportunity -- with energy sources and semiconductors at the bottom, and applications building up from there. The actively managed iShares AI Innovation & Tech Active ETF (BAI) will start out holding a concentrated portfolio of 30 to 40 stocks, Kim said, and aim to add new winners as they emerge. "The goal of the whole fund is to basically embody this concept of time and the stack. And we will have an initial version of this, but what really is important is to be able to adapt," Kim said. The top holdings in the ETF at launch are some of biggest names in the AI trade, including Nvidia and Microsoft . Some more under-the-radar names in the fund include Astera Labs , Coherent Corp ., and Japanese conglomerate Hitachi . The AI Trade The excitement around the AI trade may have recently lost some of its luster for short-term traders. The Nasdaq-100 Index has not made a new high since July, Nvidia traded sideways for much of the summer and Microsoft is down 5% over the past three months. However, Kim said that the plans and spending for advanced AI, possibly reaching so called artificial general intelligence (AGI), are already in motion and won't be easily derailed. "Most of these companies in tech are all racing to get to AGI. We all have different views of AGI and when AGI will happen and what it will cost, but it will cost a lot more. Orders of magnitude more. And not only will it take that much more [money], it will take that much time," Kim said. The valuations of some of the trendy AI stocks have also been a worry for some investors since AI took off with the introduction of ChatGPT in late 2022 . However, Kim said that some of the biggest stocks aren't actually that expensive when considering their growth prospects, and that technology lately has lagged behind the rest of the market. What's next The current phase of AI -- building the models -- will continue over the next five years, but companies will start trying to monetize those models in the form of consumer and enterprise AI systems, Kim said. Some of those have already been announced or are starting to roll out, such as AI assistants on Apple 's latest iPhones and Microsoft's Copilot tools . Looking further ahead, larger breakthroughs are possible by the end of the decade and AI can "change the foundation of work," Kim said. The companies that prove to be the winners there may not be on most investors' radar yet, or may not even be publicly traded yet. "It's all changing, and to say that we are locked in -- that the Mag 7 is the only source of investing in AI -- is, I think, very short-sighted," Kim said. Kim is a manager for the BlackRock Technology Opportunities Fund , a mutual fund with $6 billion in assets and a four-star rating from a Morningstar. BlackRock is launching a similar fund in an ETF wrapper on Tuesday, the iShares Technology Opportunities Active ETF (TEK), with Kim as one of the managers. TEK will have a broader focus than the AI-specific fund. The BAI ETF has a net expense ratio of 0.55%, while TEK has a net expense ratio of 0.75%.