Best AI ETFs for Australian Investors

Artificial intelligence is becoming significant across technology, healthcare, manufacturing, finance and other industries. As companies begin to roll out AI tools to boost productivity, develop new products and automate procedures, investors are seeking methods to get exposure to this emerging field of technology.

If you're an investor in Australia, you might want to look for an AI ETF Australia. There are a number of exchange traded funds listed on the Australian Securities Exchange (ASX) that give you with exposure to companies involved in artificial intelligence. You can find ETFs that focus on firms creating artificial intelligence (AI) technology or those that provide the infrastructure and robots needed to enable AI’s growth.

Three options worth understanding are the Global X Artificial Intelligence ETF (ASX: GXAI), Global X Artificial Intelligence Infrastructure ETF (ASX: AINF) and Betashares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ). Each has a different investment focus, making it important to understand its underlying strategy, potential opportunities and risks before considering an investment.

What Is an AI ETF?

An artificial intelligence exchange-traded fund is an investment vehicle that offers exposure to a collection of companies involved in creating, supplying or employing AI-related technologies. Instead of buying individual companies, investors have exposure to a basket of businesses in one fund.
Depending on its investment approach, an AI ETF could invest in firms that are part of the semiconductor, cloud computing, software, data centres, robotics or automation industries. But not all AI-related ETFs invest in the same types of companies.
An ETF can help to lessen the need to pick individual shares, but does not remove the market risk. The fund’s performance will be affected by the firms it owns, their valuations and the macroeconomic environment impacting the technology sector.

1. Global X Artificial Intelligence ETF (ASX: GXAI)

Investment Focus

The Global X Artificial Intelligence ETF invests on firms involved in the research, development and use of artificial intelligence. Its investment strategy spans several elements of the AI value chain including hardware, software, data-related technologies and applications that could benefit from broader AI use. 
Such a broader approach gives investors a taste of the AI industry without having to go all in on one sector, like semiconductor production or robotics. The fund's companies could benefit from rising demand for AI computing, business process automation, and AI-enabled products and services.

Potential Benefits

GXAI may be of interest to investors seeking exposure to a variety of enterprises involved in the development and application of AI. Investors can get exposure to a portfolio constructed around the more general AI subject, rather than picking individual companies.
But exposure to a burgeoning business doesn’t necessarily result into excellent investment return. Investors should look at the fund’s present holdings, the concentration of its portfolio, its costs of management and its investment technique to determine what drives its performance.

Key Risks

Share prices of AI-connected companies have been flying high and low with changing expectations for future growth. Competition, technical improvements and high values may also impact returns. A corporation may capitalise on AI adoption without making enough profit to justify its market valuation.
2. Global X Artificial Intelligence Infrastructure ETF (ASX: AINF)
Investment Focus
The Global X Artificial Intelligence Infrastructure ETF invests on infrastructure needed for the development and deployment of AI. Its investment subject comprises data centre infrastructure, electricity and energy systems and materials supporting AI-related infrastructure.
AI applications require processing power, data storage, reliable electricity and supporting equipment. As businesses increase their use of AI, demand for these resources could generate possibilities for enterprises involved in the construction and maintenance of the underlying infrastructure.

Potential Benefits

AINF provides a unique angle on AI investing. Instead of focusing mostly on companies that provide AI software or applications, it looks at companies that support the physical systems needed to run artificial intelligence (AI) technology.
This might be attractive to investors looking to get a handle on the infrastructural side of AI growth. It also demonstrates how the development of a technology can stimulate demand across a number of industries including electricity, data centres and materials.
Key Risks
Infrastructure enterprises can be exposed to large capital requirements, project delays and volatile energy costs and swings in commodity prices. Or there could be less demand than predicted, or plans to invest could change, which could delay the growth of AI infrastructure.
Investors should be aware that an infrastructure ETF could not act the same way as a fund that focuses on AI software or semiconductor companies. Its profitability is dependent upon the underlying businesses and their individual market conditions.

3. Betashares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ)
Investment Focus

The Betashares Global Robotics and Artificial Intelligence ETF invests in global companies involved in robotics, automation and artificial intelligence (AI) technology focusing on robotics. Its investment strategy covers industrial robots, non-industrial robotics, humanoid technologies and related applications. 
Robotics and AI are increasingly crossing over, with firms using intelligent systems to automate operations, better manufacturing processes and develop machines that can carry out more complicated activities. The result is an investing theme that blends AI-related technologies with physical automation.

Potential Benefits

Investors who want to see how AI is applied in robotics and automation might be attracted to RBTZ. You’ll see these technologies in action across a variety of industries from manufacturing to logistics to healthcare and more, giving you exposure to companies working on a variety of applications.
The fund also provides exposure to companies in markets around the world. Investors can evaluate its assets and regional exposure to learn which firms and regions are driving its performance.
Key Risks
Robotics and AI companies may encounter rapid technological progress, intense rivalry, and uncertainty regarding the financial viability of new products. Emerging technological industries may also have certain companies with less proven earnings or be more susceptible to shifts in investor attitude.
International investing does carry currency risk, and investments in some nations or smaller enterprises can be riskier. Investors should read the most recent portfolio and product disclosure statement before making any financial decisions.
Comparing These AI ETFs
The three ETFs provide different ways to examine the artificial intelligence industry:

• GXAI: Focuses on the broader AI value chain, including hardware, software and related applications.
• AINF: Concentrates on the infrastructure supporting AI, including data centres, energy systems and relevant materials.
• RBTZ: Focuses on robotics, automation and robotics-related AI technologies.

The differences matter because the funds may respond differently to changes in technology spending, infrastructure demand and investor expectations. Investors should compare their investment objectives, underlying holdings, fees, currency exposure and portfolio concentration rather than choosing an ETF based only on the popularity of AI.
How to Evaluate an AI ETF Before Investing
Before looking at an AI ETF, investors might check its investing aim, index methodology, holdings and management fees. Checking these details is a good way to verify whether the fund is invested in AI developers, infrastructure providers, robotics businesses or a mixture of related industries.
It’s also vital to assess where the ETF will fit into an existing portfolio. If you currently hold global technology funds, you may already have some overlapping exposure to some of the same companies. Adding yet another thematic ETF could be a source of concentration and not substantial diversity.
Finally, investors should take into account their investing horizon and capacity to withstand volatility. AI is a changing sector and commercial adoption, competition and valuations can vary dramatically over time.
Risk Considerations
AI related ETFs are subject to market volatility, technological upheaval, competitive pressures and uncertainty over future profitability. excellent industry growth does not necessarily translate to excellent investment returns, and high valuations could make funds vulnerable to price falls. Thematic ETFs can also be specialised in specific industries or firms. Holding international stocks comes with currency and geographic risks. Investors should carefully consider each fund’s holdings, expenses, investment strategy and risk disclosures before making an investing decision.
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