VettaFi’s Murphy Discusses AI Value Chain on Yahoo! Finance

• Rather than attempting to time market winners, investors are increasingly turning to ETFs for broad exposure to the entire AI value chain. This helps to mitigate the volatility associated with individual stock performance.
• The ROBO Global Artificial Intelligence ETF (THNQ) offers a holistic approach by including companies across various AI sectors.
• A proprietary “THNQ score” determines the selection and weighting of the fund’s constituents. This is based on the company’s investment in AI research and development, revenue, and leadership within the global AI industry.

When discussing trends in the AI market, Murphy explained that it’s difficult to single out the leaders and the laggards of this rapidly growing industry. Instead of investing in select companies, many investors turn to products that cover the entire AI value chain.

“There’s a lot of funds in these categories and we’ve seen all of them find assets, find traction, as folks try to diversify that single stock risk. Because you know, a stock leads today, lags tomorrow, leads again the day after. It’s too much volatility for a lot of investors,” Murphy noted. 

Murphy pointed to THNQ as an example of an ETF that covers the entire AI value chain, with holdings ranging across AI sectors from hardware and infrastructure to software.

“You have your hardware names, you have your software names, you have your cybersecurity names, you have adopters, you have data platforms, you have the cloud,” Murphy explained. “So it’s part of not trying to time who is the winner, who is the leader, who’s gonna be the laggard, because we don’t know. There’s so many parts of the AI story — it’s just that idea of owning the entire value chain of AI.”

THNQ tracks the ROBO Global Artificial Intelligence Index, providing exposure to the entire AI value chain. The index avoids over-reliance on single mega-cap names by focusing on pure-play innovators globally.

For inclusion in the index, companies are required to derive a distinct portion of their business and revenue from the AI field. Additionally, they must have a market capitalization exceeding $200 million and a minimum trailing 3-month average daily volume of $1 million.

The fund’s underlying index utilizes a specific “THNQ score” to weight each constituent. This score measures a company’s investment in AI research and development, revenue, and leadership within the AI industry. Companies must score at least 50 to secure a spot in the fund. Accordingly, companies with higher scores command larger portfolio allocations. 

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