A leading data and analytic firm, Morningstar, recently wrote a balanced article on Artificial Intelligence (AI) themed investing, “Are AI ETFs Worth the Hype?”
You might have heard about AI and investing in this area of the market using Exchange-traded Funds (ETFs) – investment funds that focus on companies involved in artificial intelligence technology. Although, we agree that AI in one of the most revolutionary technological advancements in recent history, carefully consider your approach before jumping in.
AI ETFs aren’t just about AI. They also invest in companies related to data analytics, cloud computing, and automation. This means your investment isn’t solely tied to AI. The performance of AI ETFs isn’t solely driven by AI advancements, either. Other factors like overall market trends and economic conditions play a role too. It’s important to look closely at what companies are actually in the ETF. Sometimes, the term “AI” can be stretched to include a wide range of industries.
Bottom line: While AI ETFs can give you a piece of the growing AI industry, it’s essential to approach them with caution. Make sure you understand what you’re investing in and consider factors like your risk tolerance, diversification and the specific companies held in the ETF. Also keep in mind that by default, most investors portfolios already have anywhere between 10% – 15% already allocated to companies leading the charge in AI.
Read the full Morningstar article here: https://www.morningstar.com/etfs/are-ai-etfs-worth-hype
For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based upon third party data which may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article.
