Artificial intelligence (AI) is one of the biggest trends of the 2020s. Accounting and consulting firm PwC wrote that AI could contribute $15.7 trillion to the global economy by the end of this decade in a report first published in 2017 and last modified in 2023.
AI stocks provide one way for investors to try to profit from the growth of AI technology, but funds are also an option. Below, we’re unpacking AI exchange-traded funds (ETFs) and looking at the top AI ETFs by one-year performance.
» Check out some of the best-performing ETFs
What are AI ETFs?
AI ETFs are publicly traded baskets of AI stocks, which, in turn, are shares of publicly traded companies that are involved with AI development in some way.
Some AI companies, like Microsoft (MSFT), develop AI software and large language models (e.g., ChatGPT). Others, like NVIDIA (NVDA), produce hardware important to industrial AI, such as graphics processing units.
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Best AI ETFs by one-year performance
Below are the top-performing ETFs that either have substantial exposure to AI stocks or have fund managers that use AI to inform their trading decisions, as ranked by one-year performance.
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Company | Performance (Year) |
|---|---|
? | 32.34% |
? | 29.00% |
? | 27.47% |
? | 25.98% |
? | 25.83% |
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Neuberger Berman Disrupters ETF (NBDS) | 25.68% |
QRAFT AI Enhanced U.S. Large Cap ETF (QRFT) | 24.88% |
Invesco NASDAQ Internet ETF (PNQI) | 24.80% |
Invesco AI and Next Gen Software ETF (IGPT) | 24.54% |
Fidelity MSCI Information Technology Index ETF (FTEC) | 24.35% |
QRAFT AI Enhanced U.S. Large Cap Momentum ETF (AMOM) | 24.01% |
iShares U.S. Consumer Focused ETF (IEDI) | 21.59% |
Franklin Exponential Data ETF (XDAT) | 20.67% |
Gabelli Automation ETF (GAST) | 20.62% |
Global X Artificial Intelligence & Technology ETF (AIQ) | 20.41% |
ROBO Global Artificial Intelligence ETF (THNQ) | 19.77% |
Defiance Quantum ETF (QTUM) | 17.42% |
First Trust Dow Jones Internet Index Fund (FDN) | 17.04% |
Innovator Deepwater Frontier Tech ETF (LOUP) | 16.39% |
WisdomTree U.S. AI Enhanced Value Fund (AIVL) | 15.93% |
Source: Finviz. Stock data is current as of Sept. 3, 2024, and is intended for informational purposes only. | |
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» Interested in passive funds? Check out some of the best index funds in terms of long-term performance.
Types of AI ETFs
If you take a closer look at the AI ETFs in the table above, you’ll notice that they fall into one of several categories:
Technology ETFs: Some of the funds above are really just baskets of tech stocks. We’ve included them here because some of the largest companies in the technology sector — such as NVIDIA and Microsoft — are also key players in the AI industry.
Thematic ETFs: Other funds are specifically focused on the theme of AI. In practice, their holdings tend to look quite similar to those of general tech ETFs at the moment.
“AI-enhanced” or “AI-powered” ETFs: There’s a third type of AI ETF that bears mentioning here:Funds, such as the QRAFT AI-Enhanced US Large Cap ETF (QRFT), that are not focused on AI stocks or even technology stocks but simply use AI technology to inform their trading decisions.
How to buy AI ETFs
You’ll need an investment account — such as a brokerage account or an individual retirement account (IRA) — to invest in AI ETFs.
Once you’ve opened such an account and verified that your AI ETF of choice is available, you’ll need to figure out what goals you’re looking to accomplish by investing in AI ETFs and how they fit into your overall strategy.
AI technology has real economic potential, but if you’re investing the whole balance of your IRA into AI ETFs, then you’re literally betting your retirement on that technology's success. Investment diversification can protect you from the risks of putting all of your eggs in one basket, while still allowing you to allocate small portions of your portfolio toward up-and-coming trends like AI. can be an easy way to add diversification to a portfolio.
If you’re looking to make a long-term bet on the potential of AI technology, then you may be content to just buy an AI ETF with a market order and hold it long term.
If you’re looking to day trade AI ETFs, on the other hand — say, to take advantage of short-term market fluctuations related to the trendiness of AI stocks — then you may want to consider using limit orders to get in and out of the trade at a favorable price.
» See our picks for the best brokers for ETFs
Frequently asked questions
Are there any AI ETFs that invest specifically in AI hardware, such as GPUs?
The holdings of AI ETFs often contain hardware manufacturers like NVIDIA, which makes graphics processing units (GPUs) that are used in many AI applications — but they also generally contain companies like Microsoft, which has made largely software-related contributions to AI.
If you're looking for ETFs that invest specifically in the makers of GPUs and similar high-end computer hardware, semiconductor ETFs may be of interest.
Is now a good time to invest in AI ETFs?
AI has the potential to transform the global economy in the next couple of decades, adding what could be tens of trillions of dollars of value in the process. But like any industry, it also has its hurdles — including concerns about AI safety, the prospect of government regulation of AI, and a recent leadership shakeup at OpenAI, the developer of the influential GPT AI models.
If you're looking to buy and hold AI ETFs because you believe in its long-term potential, then you don't necessarily need to worry about the day-to-day volatility of AI stocks; the question of "is now a good time to buy?" is largely moot.
However, if you're looking to actively trade AI stocks or ETFs, then news-related fluctuations could provide opportunities to buy the dip or sell at a relative high. Keep in mind that day trading isn't right for everyone, and it's always a good idea to consult a financial advisor such as a certified financial planner about any trading decisions.
Neither the author nor editor held positions in the aforementioned investments at the time of publication.
