Many are calling AI the next major frontier for global technology. It is being integrated into everything from search algorithms to smartphone apps and even electric vehicles.
Like investing in any emerging industry, investing in AI stocks and ETFs can be volatile and risky. However, Investing in winning companies in a world-changing sector can provide incredible returns.Â
This article will discuss the five best AI ETFs to consider in 2024.
- iShares Robotics and Artificial Intelligence ETF
- First Trust NASDAQ Artificial Intelligence ETF
- Global X Robotics and Artificial Intelligence ETF
- iShares Exponential Technologies ETF
- Horizons Robotics and Automation Index ETF
The Best AI ETFs Available in Canada
Here are some key facts for this ETF:
| Ticker Symbol | NYSEARCA: IRBO |
| Fund Inception Date | June 26, 2018 |
| Net Assets | $475 million |
| MER | 0.47% |
| Number of Holdings | 113 |
| Distribution Yield | 0.65% |
| Distribution Frequency | Semi-Annual |
| 1-Year Return | 28.37% |
This iShares AI ETF tracks companies in both the robotics and AI industries in an equal-weighted index. It trades on the NYSEARCA exchange in US dollars and pays out distributions semi-annually.
IRBO holds some of the top AI stocks to invest in, including NVIDIA, Alphabet, Meta Platforms, and Amazon. In all, it holds 113 different AI stocks from 11 different countries, including China, Japan, Taiwan, and Israel. The largest weighted allocation in IRBO is to US stocks at 52.30%.
2. First Trust NASDAQ Artificial Intelligence ETF
Here are some key facts for this ETF:
| Ticker Symbol | NASDAQ: ROBT |
| Fund Inception Date | February 21, 2018 |
| Net Assets | $410 million |
| MER | 0.65% |
| Number of Holdings | 109 |
| Distribution Yield | 0.32% |
| Distribution Frequency | Semi-Annual |
| 1-Year Return | 20.51% |
The First Trust NASDAQ Artificial Intelligence ETF trades on the NASDAQ exchange and tracks the NASDAQ CTA Artificial Intelligence and Robotics Index. It also pays out distributions semi-annually but has a higher MER than many of its peers.
ROBT holds stocks from 10 countries with a 56.2% allocation to US-listed stocks. Of its top holdings, ROBT holds stocks like NVIDIA, AMD, Splunk, Taiwan Semiconductor Manufacturing Company, and Intuitive Surgical.
3. Global X Robotics and Artificial Intelligence ETF
| Ticker Symbol | NASDAQ: BOTZ |
| Fund Inception Date | September 12, 2016 |
| Net Assets | $2.11 billion |
| MER | 0.69% |
| Number of Holdings | 43 |
| Distribution Yield | 0.21% |
| Distribution Frequency | Semi-Annual |
| 1-Year Return | 36.68% |
The Global X Robotics and Artificial Intelligence ETF is one of the more popular AI ETFs, with over $2 billion in assets under management. It trades on the NASDAQ exchange in the US and must be bought by Canadians in US dollars.
Of the ETFs on this list, it has had the best 52-week performance, returning 36.68% to shareholders.
BOTZ has a much more concentrated portfolio, holding only 43 AI stocks from 10 countries. The top holdings include NVIDIA, Intuitive Surgical, ABB LTD-REG, and Keyence Corp.
| Ticker Symbol | NASDAQ: XT |
| Fund Inception Date | March 19, 2015 |
| Net Assets | $3.1 billion |
| MER | 0.46% |
| Number of Holdings | 197 |
| Distribution Yield | 0.56% |
| Distribution Frequency | Semi-Annual |
| 1-Year Return | 17.50% |
XT is the second iShares AI ETF on this list. This fund doesn’t just focus on the AI industry but any technology that disrupts existing industries. These industries include social media, SaaS, fintech, and cryptocurrencies.
This ETF holds 197 stocks from more than 11 countries, including China, Japan, Canada, and Germany. The top holdings in this ETF include NVIDIA, Meta Platforms, Palantir, MongoDB, and Coinbase Global.
5. Horizons Robotics and Automation Index ETF
| Ticker Symbol | TSE: RBOT |
| Fund Inception Date | November 28, 2017 |
| Net Assets | $44 million |
| MER | 0.64% |
| Number of Holdings | 44 |
| Distribution Yield | 0.40% |
| Distribution Frequency | Annual |
| 1-Year Return | 33.64% |
The only Canadian AI ETF on this list is RBOT from Horizons ETFs. This fund trades on the TSX in Canadian dollars and pays out distributions to shareholders on an annual basis. RBOT.TO tracks the performance of the Indxx Global Robotics & Artificial Intelligence Thematic Index net expenses.
This ETF holds 44 stocks from more than ten countries, including Japan, Switzerland, Norway, and China. The top holdings in RBOT.TO are NVIDIA, Intuitive Surgical, ABB LTD ADR, and Keyence Corp.
How To Buy AI ETFs in Canada in 2024
Buying AI ETFs can be a great way to invest in this emerging industry. It’s always difficult to pick which companies will emerge as winners, so buying ETFs gives you exposure to a basket of different stocks.
In Canada, consider buying these ETFs on discount brokerages like Moomoo or Questrade to save on commission fees on trades.Â
Moomoo
Trade stocks, ETFs, options, etc.
Up to $2,400 in welcome bonuses
Very low competitive trading fees
Free Level 2 data and access to paper trading to test strategies
Earn interest on uninvested cash
No monthly or quarterly fees
Questrade
Trade stocks, ETFs, options, FX, bonds, CFDs, mutual funds, etc.
Get $50 trade credit with $1,000 funding
Low and competitive trading fees
No quarterly inactivity fees
Access to advanced tools and trading data
Top platform for advanced traders
Transfer fees waived
What are Artificial Intelligence (AI) ETFs?
Artificial Intelligence ETFs are funds that are focused on stocks in industries that are related to AI. These can include AI technology companies, semiconductor makers, and robotic companies, among others.
AI stocks can be highly volatile as most that are held in ETFs are high-growth companies. These stocks can see their performance impacted by headwinds like higher interest rates or global supply chain issues.
One way to defend against volatility is to hold AI ETFs, which provide exposure to various AI and robotic stocks.
How To Choose AI ETFs in Canada
As you can see from our list, there aren’t many AI-focused ETFs that trade on the TSX. Since most trade on US exchanges, you will likely have to buy these ETFs in US dollars.
Choosing ETFs always comes down to the MER and recent performance. All of the AI ETFs we listed also come with a modest distribution yield. A distribution helps but isn’t necessarily required for AI ETFs.
Top Canadian AI Stocks
As far as AI companies in Canada, the list is a relatively short one. But that doesn’t mean there aren’t any hidden gems on the TSX. Here are some AI stocks in Canada to consider:
- Kinaxis Inc.(KXS.TO)
- Open Text Corporation (OTEX.TO)
- Shopify Inc. (SHOP.TO)
- Fobi AI Inc.(FOBI.V)
- CGI Group Inc. (GIB.A.TO)
- Docebo Inc. (DCBO.TO)
- Constellation Software Inc. (CSU.TO)
- Blackberry Limited (BB.TO)
Downsides of AI ETFs
The downside of investing in AI ETFs is the volatility involved. Why are AI ETFs volatile? Most AI stocks are highly speculative growth stocks that can see big swings in their price.
Another downside is that with high-growth investments, you want to maximize the upside. You can see higher potential returns with AI stocks than with AI ETFs.
Finally, AI is a difficult industry to understand for most investors. This will make it difficult to determine which emerging companies are best to invest in. AI is rapidly evolving, so it will require a lot of time and effort to research these companies.
Methodology For Choosing AI ETFs in Canada
Since most AI ETFs trade in US dollars, you will want to save money elsewhere. This includes choosing ETFs with lower MERs and investing through a Canadian discount brokerage that does not charge high trading fees.
Taking a look at the companies that are held in the ETF can also help determine which is the best AI ETF. Note that you might need to research stocks that trade in other countries.
Lastly, consider the fundamentals of the ETF. Has it had a solid recent performance and outperformed the markets? Does it pay a distribution? How often does it re-balance its holdings? All of these are things to consider when choosing which AI ETF to invest in.
