Do you want to invest in artificial intelligence but don’t know where to start? This ETF has you covered.
While much of the conversation in the AI space is focused on huge technology companies, savvy investors realize that there are opportunities beyond this small group. Challenge: Which individual stocks offer the most profitable growth opportunities? One possible way to meet this challenge is to find a way to overcome it. Investing in indexes is a good option for investors who want exposure to AI in their portfolios, but may be overwhelmed by the myriad individual stocks.
the GlobalX Foundation for Artificial Intelligence and Technology (AIQ 1.45%) It is an exchange-traded fund (ETF) that contains a variety of stocks that all benefit from artificial intelligence technology in one way or another. This strategy can provide some lucrative gains in the long run for patient investors.
Let’s dive into the Global
How does index investing work?
It’s a common misconception in the investing community that you need to pick individual stocks that consistently outperform the markets to generate wealth. While picking specific stocks can lead to big gains over the long term, there are also negative ways to approach the capital markets.
Index funds are a great way for investors to get started. These typically provide exposure to many different stocks, each with a different weight in the overall portfolio. This type of investing helps you create a diversified portfolio without the necessary due diligence for each property.
Even popular (and experienced) investors like Warren Buffett buy index funds to help diversify their portfolio of individual stocks.
A unique approach to investing in artificial intelligence
What makes the Global Furthermore, the ETF also contains positions in several companies that operate primarily abroad, providing a wide range of local and international opportunities.
Some of the fund’s largest holdings include semiconductor manufacturers Nvidiasocial media company Meta platformsspecializes in e-commerce and cloud computing AmazonAnd streaming platform Netflix.
Although this is just a small sample of the total portfolio, investors can see that the Global
What can you expect from the Global
While AI is currently the hottest ticket on Wall Street, investors should know that the Global
|Average annual return
There are some important differences to note here. First, the fund’s returns over the past year were largely driven by overall gains among technology stocks — especially in the United States Nasdaq Composite.
Likewise, a three-year return of 5% may seem weak. But 2022 was a bad year for capital markets, and technology stocks in particular witnessed heavy selling. Both of these time periods are examples of abnormal returns.
The five-year return and the ETF’s total return since its inception paint a clearer picture of what investors can expect over the long term. While an annualized return of 14% may not seem like a lot when compared to the performance of specific individual stocks, keep in mind that this is slightly less than twice the long-term return offered by Standard & Poor’s 500.
Looked at another way, the Global Through the power of compounding, even a small investment of just a few hundred dollars each month can generate meaningful wealth over the long term.
Given the importance generative AI will play in markets such as cybersecurity, cloud computing, enterprise software, and more, the Global Through diversification.
Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adam Spatacco holds positions at Amazon, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Netflix, and Nvidia. The Motley Fool has a disclosure policy.