What's under the hood of the new AI ETF on the ASX?

The Aussie stock market just got a little more 'artificially intelligent' with the launch of a new ETF.

Mitchell Lawler

Mitchell stumbled upon the concept of investing when in high school, devotedly urging his parents to put some money into a handful of technology companies with increasingly popular products among his demographic – many of which have gone on to great success. It wouldn’t be until 2017, some five years later, that Mitchell became an investor of his own money. Having studied and worked as a mechanical engineer in the building services industry, Mitchell takes a methodical and analytical approach to evaluating businesses. Rather than relying purely on numbers, Mitchell drills beyond a company’s metaphorical mantle to unearth obscure patterns or competitive advantages that would go otherwise unnoticed. His expertise resides within areas such as software, consumer goods, and building services equipment. However, his quest to find quality companies that set the industry standard and flex some degree of an impenetrable position has no limits – small cap to mega cap, cosmetics to healthcare – if it’s an exceptional business it’s on his radar.

Published April 10, 2024 11:16 am AEST

The Australian Securities Exchange (ASX) is welcoming an AI exchange-traded fund (ETF) today.

Artificial intelligence has captured the hearts and minds of investors with the popularisation of chatbots and AI-generated imagery. The promise of a more productive, creative, and innovative future is taking the world by storm — boosting the fortunes of AI-relevant companies while doing so.

Today's launch of the Global X Artificial Intelligence ETF (ASX: GXAI) gives Aussies another way to tap into the hot sector. So, let's take a tour of the latest ETF to hit the ASX while the iron is hot.

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares — Image source: Getty Images

What's inside the ASX AI ETF?

The Artificial Intelligence ETF is the 36th exchange-traded fund in the New York-based provider's lineup in Australia.

According to its website, this ASX AI ETF aims to invest in companies that "potentially stand to benefit from the further development and utilisation of artificial intelligence technology in their products and services, as well as in companies that provide hardware facilitating the use of AI for the analysis of big data".

Furthermore, the fund's goalpost is the Indxx Artificial Intelligence & Big Data Index. The aim is to give investors a return in line with this index. The thematic index that Global X will be tracking has increased 41.9% over the past year.

The all-important question: What will investors buy in a slice of the Global X Artificial Intelligence ETF?

Company	Net Assets (%)
Nvidia Corp (NASDAQ: NVDA)	3.96%
Meta Platforms Inc (NASDAQ: META)	3.62%
Netflix Inc (NASDAQ: NFLX)	3.43%
Amazon.com Inc (NASDAQ: AMZN)	3.20%
Qualcomm Inc (NASDAQ: QCOM)	3.05%
Tencent Holdings Ltd	3.03%
Oracle Corp (NYSE: ORCL)	2.99%
Samsung Electronics Co Ltd	2.96%
IBM Common Stock (NYSE: IBM)	2.93%
Salesforce Inc (NYSE: CRM)	2.93%

Data as of 9 April 2024, Global X ETFs

AI superstar Nvidia takes pole position in the ETF. The company, which has risen 77% in 2024 alone, is the largest by market capitalisation inside the fund. However, the weighting of positions is not based on market cap.

For instance, social media giant Meta (owner of Facebook and Instagram) has the second largest allocation. Yet, Jeff Bezos' Amazon is roughly US$600 billion larger than Meta and is fourth on the list.

The ETF incurs a 0.57% management fee. As a comparison, the ASX 300 tracking Vanguard Australian Shares Index ETF (ASX: VAS) charges a 0.07% management fee.

Shares in the ASX AI ETF are trading at $10.07 on the open.

Editor's note: A prior version of this article suggested the Global X Artificial Intelligence ETF is actively managed. This is incorrect. The fund follows a passive approach, adjusting only to closely correspond to the relevant index.

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