2024 proved a strong year for artificial intelligence investors, as AI enthusiasm remained robust. While much of the current hype centers around generative AI, it’s not the only AI opportunity on the horizon. The KraneShares Artificial Intelligence & Technology ETF (AGIX ) seeks to capture the AI value chain while also looking longer term.
Generative AI is the current darling of artificial intelligence enthusiasts, but it’s only the first stepping stone in what’s to come, according to KraneShares.
“We believe the AI revolution is far from complete and not limited to ‘Magnificent 7’ companies,” KraneShares wrote in a white paper. Instead, artificial intelligence will evolve over a number of years, involving a range of companies along the way. The firm anticipates it will “progress from hardware development (the current stage) to infrastructure to applications, in that order, heading directly towards the theoretical goal of artificial general intelligence (AGI).”
While some artificial intelligence strategies chase the current, largest names across industries, the KraneShares Artificial Intelligence & Technology ETF (AGIX ) seeks a more forward-looking approach. The fund offers a different style of investing for the “new investment paradigm” that AI requires.
AGIX offers high-conviction, concentrated exposure to artificial intelligence companies. The fund tracks the Solactive Etna Artificial General Intelligence Index that holds both public and private artificial intelligence companies. AGIX is up 17.36% on a price return basis since its launch in July 2024, according to Y-charts data
The strategy seeks to capture the breadth of the AI economy. This includes the opportunity set beyond the Magnificent Seven found in a number of subindustries. The strategy invests in companies involved in semiconductors, data centers, cloud companies, edge AI, large language models, and AI applications. Notably, the fund is also able to allocate to private artificial intelligence companies as well as public ones.
While top holdings include a number of Magnificent Seven companies, other companies invested in include Salesforce, Duolingo, Palantir, Cloudflare, and Roblox, as of January 14, 2025.
AGIX invests in three fundamental pillars of the artificial intelligence ecosystem. These include infrastructure, hardware, and applications. The index begins with a starting universe of approximately 3,000 companies before filtering for characteristics such as liquidity and market cap. It then screens for companies that fall within 12 AI-related industries.
Every security receives an AI exposure score, a proprietary formula that considers “AI readiness” as well as “AI relevance.” The highest-scoring companies make it into the Index, and are further weighted by their AI exposure score as well as by market cap.
No single pillar makes up more than 40% of the total weight of the underlying index. The strategy is a high-conviction one, with between 40-50 securities at any given time. It also remains timely with current trends by rebalancing on a quarterly basis.
As of the end of December, the fund carried a 74.58% weight to information technology, 12.97% to communication services, and 11.15% weight to consumer discretionary. The strategy also invests globally but currently carries a heavy U.S. focus. In total, 90.72% of holdings were from the U.S., as of the end of December. Taiwan, Germany, the Netherlands, and South Korea made up the remainder over the same period.
AGIX carries an expense ratio of 1.00%.
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