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The NYSE is home to a robust lineup of thematic ETFs providing targeted AI exposure


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Artificial Intelligence (AI) has rapidly transitioned from science fiction to reality, swiftly becoming a crucial element in today's technological ecosystem. Its influence extends from basic conveniences like voice-controlled personal assistants to game-changing technologies in healthcare, cybersecurity, and autonomous vehicles.
As AI continues to evolve, it's reshaping industries and creating significant investment opportunities. For those who recognize the potential of AI and are interested in gaining targeted exposure to this revolutionary technology, ETFs listed on NYSE ARCA can provide transparent, cost effective, and targeted exposure.
The NYSE offers a broad range of thematic ETFs focused on AI, allowing investors to gain access to companies driving and benefiting from this technology's advancements. Recent performance from these ETFs showcases how lucrative the AI sector can be, punctuated by the stellar earnings reported by chipmaker Nvidia.
As a leading player in the industry, Nvidia’s success is often viewed as a barometer for AI’s broader growth and potential. The company's remarkable earnings were largely attributed to the heightened demand from AI, underscoring the industry's robust and promising trajectory.
Meanwhile, innovations in AI continue to emerge at an unprecedented pace. One notable advancement is OpenAI’s continual refinement of ChatGPT, a state-of-the-art language model that highlights the capabilities and potentials of AI. Competitors like Google and Microsoft have been swift to reveal their own versions.
This development, along with others, is fueling talks of an AI "supercycle," a period of intense growth and expansion driven by AI's integration across industries and sectors. Here's a close look at two notable NYSE listed ETFs to consider if you believe in the AI supercycle.
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Debuting on October 21st, 2013, ROBO was the first robotics and automation focused ETF to come to market, with just over $1.37 billion in AUM right now. This ETF tracks the proprietary ROBO Global Robotics and Automation Index, which currently offers exposure to 79 holdings across 14 developed and emerging markets, spanning small, mid, and large-cap stocks.
57% of ROBO's holdings fall into the "application" classification, which as its name suggests deals with the integration and deployment of automation, robotics, and AI in industries like healthcare, logistics, automation, agriculture, and manufacturing. The remaining 43% deal with companies that develop and sell these technologies.
In terms of sector representation, U.S. stocks hold the lion's share at a 44% weighting, followed by Japanese equities at 21%. Interestingly enough, ROBO features an almost even 42% and 44% split between large and mid-cap stocks respectively, with the rest allocated towards small caps. This stands in contrast with some other AI focused ETFs that are dominated by large caps.
IRBO represents one of BlackRock iShares' many thematic offerings. In this case, the ETF focuses on companies it defines as being "at the forefront of robotics and artificial intelligence innovation." This is achieved by tracking the NYSE FactSet Global Robotics and Artificial Intelligence Index, which is equal weighted.
IRBO debuted on June 26th, 2018, making it newer than ROBO. It also sports a lower AUM at $438.6 million, making it less popular so far. However, the ETF still has plenty to offer. The ETF's equal-weight index results in fewer U.S. large-cap stocks dominating the top holdings, and a greater allocation to Chinese and Japanese equities at 12.5% and 10.5% respectively.
In terms of sector representation, the majority of IRBO's exposure sits in technology at 55.3%, followed by communications and industrials at 18.6% and 14% respectively. One notable advantage IRBO has over ROBO is with regards to fees. With an expense ratio of 0.47%, the ETF is half as expensive as ROBO, which charges 0.95%.
Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
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