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.

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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.

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?

CompanyNet 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 Ltd3.03%
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.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Motley Fool contributor Mitchell Lawler has positions in Meta Platforms. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Meta Platforms, Netflix, Nvidia, Oracle, Qualcomm, and Salesforce. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended International Business Machines. The Motley Fool Australia has recommended Amazon, Meta Platforms, Netflix, Nvidia, and Salesforce. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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