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Global X Launches AI and Big Data ETFs

Zacks Equity Research
Asbury Automotive (ABG) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.

The artificial intelligence market, currently valued at $21.46 billion, is expected to reach $190.6 billion in 2025 as per MarketsandMarkets. In order to tap the exponential growth in the space, Global X launched Future Analytics ETF (AIQ) on May 15, making it the seventh fund in its Thematic-Technology lineup, which had AUM of $3.9 billion as of Apr 30 (read: First Trust Launches Another Robotics ETF).

AIQ Portfolio

The new fund seeks to provide investment results of the Indxx Artificial Intelligence & Big Data Index. The benchmark is designed to provide exposure to companies that are positioned to benefit from the further development and utilization of artificial intelligence technology in their products and services, as well as the companies that provide hardware, which facilitates the use of artificial intelligence for the analysis of big data.

The fund will allow investors to access the growth potential of the companies that have invested in the AI and big data technologies. Information technology (81.3%) is the leading sector component with Internet Services (24%), Semiconductors (15.1%) and Application Software (15%) as top three sub-categories.

The fee of this fund is 68 basis points and as far as country exposure is concerned United States controls more than three-fourth majority while others like Cayman Islands, Germany, Canada and many others make up for a minor allocation each. Baidu Inc, Alibaba Group Holding Ltd and NVIDIA Corp are the top 3 fund allocations with none holding more than 3.3% of the fund. AIQ controls 82 stocks in its basket.

How does it fit in today’s portfolio?

In a highly competitive business environment it is essential to keep track of numerous data that has been collected or utilized in the due course of business. As the volume of data grows, automated data management tools become a necessity. This is why in the last few years there has been a spectacular rise in the usage of big data and artificial intelligence.

The idea of thematic investing is also on the rise and in the near future these funds will be able to give maximum returns. Classified and well researched data are the most valuable asset for any firm as it provides a detailed analysis of the market, competitors, customer base, future predictions and financial growth prospects. This is exactly where Big Data fits in (read: Here's Why You Should Invest in Robotics & AI ETFs).  

ETF Competition

There are also some alternative funds available in the market. Global X Robotics & Artificial Intelligence Thematic ETF (BOTZ) is one such fund which tries to provide investment results of the Indxx Global Robotics & Artificial Intelligence Thematic Index. Its annual fee is 68 basis points and asset base totals $2.57 billion. ROBO Global Robotics and Automation Index ETF (ROBO) is another competitor, providing investors access to rapidly evolving robotics, automation and artificial intelligence companies. The fund which has assets of $2.28 billion under management is a very expensive option with annual fees of 95 basis points (read: Here's an AI Powered ETF That Uses IBM's Watson & Google Deep Mind).

Bottom line

As AIQ is investing in big data tech companies it will easily be able to mop up massive investment inflows from an emerging trend.

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