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In 2023, AI And Robotics ETFs Will Be Hotter Than Crypto‍

April 3, 2023
minute read

It is worth mentioning that exchange-traded fund investors are now looking for exposure to this space thanks to the popularity of chatbots powered by artificial intelligence, such as ChatGPT. 

In a survey conducted by Brown Brothers Harriman released on Monday, it was found that 56% of professional investors were planning to add ETF strategies focused on artificial intelligence and robotics to their portfolios in 2019. This is an increase over the 46% figure that was recorded in 2022. Aside from internet and technology, all other thematic strategies did not perform as well in this category. A stark contrast can be seen in 2022 when AI and Robotics was set to trail virtual asset themes and ESG-themed ETFs by a wide margin. 

Investing interest in the AI industry has soared in recent months as a result of a recent rally in AI stocks. Trade Algo reports that ETFs tracking robotics and artificial intelligence attracted approximately $105 million in March, in contrast to other thematic strategies that were outflowing, like clean energy, electric cars, and cloud computing, which were all outflowing, according to data compiled by the firm. 

Among the ETFs receiving inflows thus far this year, the Global X Robotics & Artificial Intelligence ETF (ticker: BOTZ) with its $1.7 billion market capitalization led with about $121 million. Since the beginning of the year, the fund has gained 24%.

There is always a crowd who wants exposure to the ‘next thing’, no matter whether it is artificial intelligence, SPACs, or electric vehicles," according to Todd Sohn, Strategas's ETF strategist. Due to recency bias, they do not want to miss out on the FOMO run, especially given that the run is fast approaching."

The survey reveals that investors are still willing to take a risk on certain sorts of assets that are considered speculative despite uncertainty over the Federal Reserve's next monetary policy move and its potential impact on risk assets. 

A survey carried out by the ETF Research Institute on behalf of 325 institutional investors, financial advisors, and fund managers throughout the world found that even the crypto winter did not scare investors away from cryptocurrency and digital asset-themed ETFs. As far as the plans to add this strategy in 2023 are concerned, forty-eight percent of investors are still planning to do so. From last year to this year, that's a drop of just six percentage points.

Despite a reg crackdown that has been put in place over the last few weeks, Bitcoin, the largest crypto on the market based on its market value, has rallied 70% as investors put their money where their mouths are and bet on the fact that its independence from the traditional financial system might make it immune to the turmoil in the banking sector. 

Among the investors that are betting on the long-term deflationary potential of artificial intelligence in the long-run, there are some investors such as Ankur Crawford, a portfolio manager at Fred Alger Management, who believe AI will drive down costs and improve efficiency in the long-term.  

According to Crawford, initially it might be inflationary rather than deflationary. As for how much it will cost to get it up and running, there is a cost associated with that. In the meantime, I do think that that is a deflationary force that needs to be addressed." 

Cathy Hills
Associate Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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