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AI ETFs for 2024: Unleashing the Power of Innovation and Investment

AInvestThursday, Mar 14, 2024 7:05 pm ET
2min read

As artificial intelligence (AI) continues to revolutionize various sectors, investors are increasingly seeking opportunities to capitalize on this technological advancement. Exchange-Traded Funds (ETFs) focused on AI offer a convenient way to gain exposure to a diverse range of companies driving and benefiting from AI innovations. In this article, we highlight the top AI ETFs for 2024, each with its unique approach to capturing the AI market's growth potential.

1. Fidelity MSCI Information Technology Index ETF (FTEC)

Overview: FTEC is a well-established ETF that tracks the MSCI USA IMI Information Technology 25/50 Index, focusing on the information technology sector in the U.S. equity market. With assets under management (AUM) of approximately $6.7 billion and a low expense ratio of 0.08%, FTEC is a cost-effective option for investors.

Investment Thesis: FTEC offers exposure to a broad range of technology companies, including those at the forefront of AI innovation. The ETF's significant holdings in major players like Apple and Microsoft provide a stable foundation, while its diversification across various tech sub-sectors allows for potential growth from emerging AI trends.

Recent Performance: FTEC has experienced some volatility in line with the broader tech sector but presents potential entry points for long-term investors. The ETF's performance is expected to align with the technology sector's overall growth, driven by continued advancements in AI and digital transformation.

2. QRAFT AI-Enhanced U.S. Large Cap Momentum ETF (AMOM)

Overview: AMOM is an actively managed ETF that utilizes AI algorithms to select large-cap U.S. stocks exhibiting high price momentum. With an AUM of $31.4 million and an expense ratio of 0.75%, AMOM offers a unique approach to capturing market trends.

Investment Thesis: The use of AI in its investment strategy allows AMOM to adapt quickly to changing market dynamics, potentially capitalizing on short-term gains. The ETF's focus on momentum stocks positions it to benefit from rapid growth in the AI sector, making it an intriguing option for investors looking for a more dynamic approach.

Recent Performance: AMOM has shown impressive results since its inception, outperforming several peers in the U.S. Equity Momentum category. Its active management and AI-driven strategy have enabled it to navigate market volatility effectively, providing a compelling case for its inclusion in an AI-focused investment portfolio.

3. Invesco QQQ Trust ETF (QQQ)

Overview: QQQ is a widely recognized ETF that tracks the Nasdaq 100 Index, comprising the 100 largest non-financial companies listed on the Nasdaq stock exchange. With an AUM of over $100 billion and a low expense ratio of 0.2%, QQQ is a popular choice for investors seeking exposure to the tech sector.

Investment Thesis: QQQ's holdings include leading tech giants heavily involved in AI research and development, such as Microsoft, Amazon, and NVIDIA. The ETF's focus on the Nasdaq 100 ensures exposure to companies driving innovation in AI, making it a solid choice for investors looking to capitalize on long-term growth in the technology sector.

Recent Performance: QQQ has a strong track record of performance, consistently outperforming the S&P 500 over the long term. While it may experience periods of volatility due to its tech-heavy composition, QQQ remains a favored option for investors bullish on the continued dominance of technology and AI in the market.

Conclusion

Investing in AI ETFs provides a diversified approach to gaining exposure to the rapidly evolving AI industry. FTEC, AMOM, and QQQ each offer distinct strategies for capturing the growth potential of AI, catering to different investment preferences and risk tolerances. As AI continues to shape the future of technology and business, these ETFs present opportunities for investors to participate in the transformative impact of artificial intelligence on the global economy.


Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.