In this episode of ETF Edge, experts discuss the growing AI-themed ETF landscape, highlighting Dan Ives’ actively managed AI-focused ETF that targets a diversified portfolio of companies driving and benefiting from AI innovation, particularly in software and autonomous technologies. They also address the role of thematic ETFs amid market volatility, emphasizing their potential for targeted exposure, the rise of active management, and the importance of incorporating such funds into a balanced investment strategy.
In this episode of ETF Edge, host Dominic Chu discusses the burgeoning artificial intelligence (AI) thematic exchange-traded fund (ETF) landscape with Dan Ives, global head of technology research at Wedbush Securities, and Todd Rosenluth, director of research at Vetify. Dan recently launched an AI-focused thematic ETF called IV, which concentrates on 30 dynamic companies that are key players or beneficiaries in the AI ecosystem. The fund is actively managed and rebalanced quarterly to reflect shifts in technology and market leadership, focusing on software, chips, consumer applications, and autonomous technologies.
Dan explains that the selection process for the ETF involves deep fundamental research to identify companies driving AI innovation and those benefiting indirectly from AI advancements. While Nvidia remains a core holding due to its chip dominance, the current emphasis is on software companies that are enabling AI use cases across industries. The fund aims to capture a broad spectrum of AI-related opportunities, including some names not traditionally recognized as AI plays, such as those in robotics and consumer tech, making it a thematic yet diversified portfolio.
Todd provides a broader market perspective, noting that thematic ETFs like Dan’s IV and others such as Robo Global’s THNQ offer investors targeted exposure to AI beyond general tech ETFs like QQQ or VGT. He highlights that thematic ETFs often carry higher fees than broad index funds but justify this through specialized research and portfolio construction. Advisors typically allocate about 5-10% of portfolios to thematic investments, balancing targeted exposure with broader diversification to avoid overlap and manage risk.
The discussion also touches on the current geopolitical volatility and its impact on tech investing. Todd observes that while recent geopolitical events have introduced market fluctuations, investors are increasingly accustomed to volatility and are seeking safety through diversified ETFs and fixed income products. Dan emphasizes that despite concerns about tech valuations, the transformative growth potential of AI and related technologies justifies continued investment, viewing market dips as buying opportunities for long-term gains.
Finally, the conversation turns to emerging trends in ETF investing, with Todd highlighting the rise of active management within ETFs, including active thematic funds. This approach is gaining traction as investors seek more nuanced exposure and expert stock selection in rapidly evolving sectors like AI. Dan reiterates his conviction in software and autonomous robotics as key sub-themes within AI, citing Tesla as a prime example of a company positioned at the intersection of these transformative technologies. The episode concludes with encouragement for investors to stay informed and consider thematic ETFs as part of a diversified investment strategy.
