Rosenbluth Talks AI on ETF Edge

AI ETFs have been seeing incredible performance. “No matter how you slice it, any ETF with AI is outperforming this year,” Pisani said. He continued, “It doesn’t matter if it is index-based or actively managed. It doesn’t matter if it’s market-cap-weighted or equal-weighted.” The S&P 500 is up 19% year-to-date, but some AI ETFs are seeing almost double that performance.

ETFs such as the Global X Artificial Intelligence & Technology ETF (AIQ B-) cover a lot of the standard bases in terms of AI stocks. Companies such as Nvidia, Microsoft, and Tesla are common exposures. However, investors are wondering how AI investing can broaden out. “In the last four months, we’ve seen consistent flows and trends towards robotics and AI ETFs,” Rosenbluth said, pointing to the ROBO Global Robotics & Automation Index ETF (ROBO B-) and the Global X Robotics & Artificial Intelligence ETF (BOTZ C+). Because these ETFs aren’t exclusively looking at AI, but also include firms that have interest in automation and robotics, it allows for investors to get more diverse exposure.

Rosenbluth also noted that healthcare companies like Intuitive Surgical are also benefiting from robotics. On the AI front, there are e-commerce companies such as eBay that are also finding a lot to be excited about in terms what AI can do for their business. Rosenbluth shared, “You can invest in companies that are targeted to [AI] and companies that are directly benefiting from it.”

Rosenbluth added that active managers will have the ability to broaden out exposure to industries and companies that are actively benefiting from AI, noting that “they have the ability to swing in certain directions based on what trend is in favor and what trend is out of favor.”

Pisani pointed out that for many investors, AI runs into a revenue problem. Microsoft is considered a major AI player, but when you look at its revenue, only a small portion of it comes from AI. However, seeing how AI can increase efficiencies in other industries gives Pisani optimism about the technology.

“That’s the way that ETFs that are exposed to AI think about, from a revenue standpoint,” Rosenbluth said, noting that as fund managers look to build their products, they research companies from a revenue standpoint. “AI is going to improve the profitability of so many of these sectors.”

The efficiency that AI provides is going to set advisors up for success. Rosenbluth shared, “We have an AI Symposium that’s going to take place on August 30. Fintech, as well as robotics and traditional AI, are three of the themes we’re going to be exploring.”

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