A Smart Play on Artificial Intelligence

06/10/2019 5:00 am EST

Focus: ETFS

Jim Woods

Editor, Successful Investing and Intelligence Report

The question of how the use of artificial intelligence (AI) will affect daily life has yet to be thoroughly answered, cautions ETF expert Jim Woods, editor of The Deep Woods.

While politicians have yet to enact policies that aim to cushion the deleterious effects of AI that include the loss of employment in certain sectors in the economy, artificial intelligence still provides ample opportunities for investors.

The Global X Future Analytics Tech ETF (AIQ) is an exchange-traded fund (ETF) that can give a prospective investor access to this dynamic part of the global economy.

Specifically, AIQ tracks a market-cap-weighted index of developed-market equities from companies that are involved with artificial intelligence and big data.

The companies that make up the AIQ portfolio mainly use artificial intelligence to analyze big data for their own operations or for other companies. Those holdings are selected by AIQ’s managers, based on a composite analysis of public filings, products and services, official company statements and other information.

Some of this fund’s top holdings include Qualcomm (QCOM), Facebook, Inc. Class A (FB), Microsoft (MSFT), Adobe (ADBE), Amazon (AMZN), ServiceNow (NOW), Netflix (NFLX) and  Raytheon (RTN).

While these companies are mainly in the software & IT services sector, encompassing 60.73% of the fund’s total composition, this ETF has holdings in companies that are in the semiconductors & semiconductor equipment, 14.28%; aerospace & defense, 5.20%; industrial conglomerates, 3.81%; and professional & commercial services, 3.63%.

The fund currently has $41 million in assets under management and an average spread of 0.38%. It also has an expense ratio of 0.68%, meaning that it is more expensive to hold in comparison to other exchange-traded funds.

In terms of AIQ’s MSCI ESG Fund Quality Score of 5.69, it ranks in the 56th percentile within its peer group and in the 56th percentile within the global universe of all funds in the MSCI ESG Fund Metrics coverage.

This fund’s performance has been mixed in the long term. While it only has been down 8.02% over the past month, it rose 1.07% over the past three months and remains up 20.37% year to date.

AIQ Chart
Chart Courtesy of stockcharts.com

In short, while AIQ does provide an investor with the ability to profit from the world of artificial intelligence, the sector may not be appropriate for all portfolios. Thus, interested investors always should do their due diligence and decide whether the fund is suitable for their investing goals.

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