Artificial intelligence (AI) was all the rage in 2023 as both hardware and software developers raced to introduce new consumer-oriented platforms in this field. This AI race will have multiple winners, and most of the biggest winners will likely be found in one specialized exchange-traded fund (ETF) that is the easiest and best way to own AI – the Global X Artificial Intelligence & Technology ETF (AIQ), suggests Jim Woods, editor of The Deep Woods.
Companies such as Nvidia (NVDA), Microsoft (MSFT), Amazon (AMZN), Meta Platforms (META) and Alphabet (GOOGL), among multiple others, provided a significant alpha-generating dynamic for investors thanks to AI optimism in 2023.
I am of the opinion that AI is still in its nascent stages, not only in terms of the technology’s role in society, but also in terms of its upside potential for investors. AIQ seeks to invest in companies that stand to benefit from the further development and utilization of artificial intelligence technology in their products and services, as well as in companies that provide hardware facilitating the use of AI for the analysis of big data.
AIQ is based on the Indxx Artificial Intelligence & Big Data Index, which aggregates more than 80 stocks with minimum market cap and daily trading liquidity filters. The index methodology is constructed with a market-cap weighting emphasis, but no single holding is allowed to make up more than 3% of the portfolio at each rebalancing schedule. This means that capital is more evenly spread over a larger portion of the basket rather than a few mega-cap stocks dominating the playing field.
One attractive aspect of the AIQ portfolio is that you get exposure to every segment of the artificial intelligence value chain – chipmakers, cloud stocks, big data aggregators, software developers, industrial heavyweights, and database providers. All of these are key components in the infrastructure necessary to effectively grow this field.
Through the first 11-plus months of 2023, AIQ produced a total return of nearly 50% while the S&P 500 returned about 21%. Achieving far more than double the domestic equity benchmark returns is a difficult feat in any year. But if I’m correct in my assessment that 2023 is just the start of the big AI move higher, then AIQ is a must own.
If you are looking for well-rounded, complete, yet more conservative exposure to the next massive wealth-building technology, then take a look at AIQ.
