If You Have $10,000 And Want To Bet on AI and Robotics, These Are The Investments I’d Pick

Source Domain: 247wallst.com

Artificial intelligence and robotics remain among the most popular investment themes on the market. The problem is that a lot of investors approach them the wrong way. Rather than trying to identify the next moonshot startup before everyone else, I generally prefer using thematic ETFs.

Even though thematic ETFs have their flaws, they still provide some diversification and reduce the risk that comes from betting everything on a single stock. That said, investors should still be selective. Many thematic ETFs charge high fees, launch near the peak of a hype cycle, and end up holding little more than an expensive basket of the same technology stocks you could already own through a broad market ETF.

Still, a handful of AI-focused ETFs have proven themselves to be reasonably constructed and worthy of consideration. If I had $10,000 to allocate toward the theme today, these are two funds I would look at: one low-cost passive option and one actively managed fund.

Xtrackers Artificial Intelligence and Big Data ETF

The first ETF is the Xtrackers Artificial Intelligence and Big Data ETF (XAIX). Unlike many thematic funds that simply screen companies based on current AI-related revenue, XAIX attempts to identify firms actively developing AI technologies.

The process begins with a universe of more than 1,700 companies. From there, the index uses a proprietary patent-based screening process to identify businesses engaged in areas such as deep learning, natural language processing, image and speech recognition, cloud infrastructure, cybersecurity, and big data analytics.

The index then assigns an intensity score based on how extensively companies participate in these fields. The goal is to identify firms demonstrating meaningful research and development activity rather than simply benefiting from current AI enthusiasm.

What I like most about XAIX is that it remains relatively affordable. The ETF charges a 0.35%…

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