Above is our pick of the best AI funds, including the selection criteria used to select the companies to include in each fund.
The criteria result in significant differences between portfolios, with some funds heavily biased towards US large-cap companies (including Microsoft and NVIDIA), while others focus on mid-cap companies such as SentinelOne and C3.ai.
Brewin Dolphin’s Mr. Moore comments: “Investors should have a clear idea of the size of technology companies like Microsoft.
“In my opinion, it would be wise to stick with more established companies that have the ability to invest heavily, such as Apple, Alphabet, Microsoft, Experian and RELX, all of which are big operators, winners in their fields, cash generators and… Investments are “a lot of capital to hold their positions.”
Ms Hutchinson also points to the risks of investing in more speculative AI companies: “You should be aware of whether there are small and medium-sized companies in the fund, which are likely to offer very good upside potential, but can also mean that you come through.” some volatile stock market moves.”
Another option is to invest in both adopters and developers of AI technology.
Sanlam’s Mr Ford says: “We would be strongly committed to investing in funds that can invest in companies that are embracing and deploying AI, rather than just focusing on those providing the enabling technologies.”
“That means a much wider range of possibilities. Some of the most interesting AI opportunities lie in non-technology sectors like healthcare. Similarly, in the industry, John Deere has developed fully autonomous tractors that would not be possible without AI.
“The enabling technologies [semiconductors and related areas] are among the most cyclical areas of the market and therefore also some of the most volatile – so it makes sense to diversify exposure to more stable growth in areas like healthcare.”
Ms Hutchinson also advises investors to be aware of possible overlaps with other funds in their portfolio: “The weighting of US stocks in the AI ETFs is relatively high, although some products that also focus on the robotics theme have a have more reasonable exposure to Japanese equities.” ”
Investors looking for ESG-friendly (environmental, social and governance) investments may have concerns about the ethics of AI technology, such as facial recognition, and its potential for abuse. With this in mind, some funds are using ESG criteria to screen potential AI investments.