Top 10 US Artificial Intelligence ETFs for Singapore Investors

In recent years, the industrial revolution sparked by AI has not only swept through various industries, including education and healthcare but has also sparked a new wave in financial investment. A report by Grand View Research, a U.S.-based market research firm, predicts that the global AI market size will grow from $136.5 billion in 2023 at a compound annual growth rate of 37.3 percent to approximately $1.8 trillion by 2030. Investor interest in AI continues, and AI stocks and AI ETFs have become the most common way to gain exposure to AI. AI ETFs offer a diversified investment path for investors looking to capitalize on this trend without the risk of investing in individual companies.

In this article, we will introduce Singapore investors to what AI ETFs are, the benefits of investing in AI ETFs in the US stock market, and highlight the top AI ETFs in the US market. Of course, we will also provide AI ETF investment tips for reference.

What are Artificial Intelligence ETFs?

AI ETFs combine stocks of companies involved in artificial intelligence technology into a single basket, offering diversified investment opportunities in an industry that is at the forefront of technology. The following will help you gain a deeper understanding of AI ETFs by exploring their features.

Key Features of AI ETFs

Investment vehicle: Unlike direct investments in individual stocks, AI ETFs are a type of mutual fund that invests in a diversified portfolio of stocks.

Focused on AI: AI ETFs focus on cutting-edge AI companies, including those involved in machine learning, robotics, big language modeling, natural language processing (NLP), and more.

Traded on an exchange: AI ETFs trade on exchanges just like stocks, making it easy for investors to buy and sell throughout the trading day.

Why Invest in US Artificial Intelligence ETFs?

AI ETFs cover a diverse range of cutting-edge technology companies, combining the common strengths of ETFs with the growth potential of AI. The United States, with its seven tech giants (Microsoft, Apple, NVIDIA, Google's parent company Alphabet, Amazon, Meta (formerly Facebook), and Tesla), offers AI ETFs that represent some of the leading and most widely followed AI investments in the global market. Investing in the US AI ETFs provides a strategic path into the booming AI space with the following benefits:

Lower Costs:  AI ETFs are generally passively managed and have lower expense ratios compared to actively managed funds, which can lead to higher net returns.

Diversification: Investing in a specific  AI ETF provides investors exposure to a range of geographically diverse companies operating in different technology segments, effectively decentralizing the impact of any one company's underperformance.

Transparency: The holdings of AI ETFs are publicly disclosed, allowing Singaporean investors to monitor this information at any time via trading platforms and exchange offers.

Flexibility: Investors in Singapore have the flexibility to buy or sell AI ETFs at any time during the trading day, allowing them to adjust their positions as needed.

Market Size and Liquidity: The US stock market, one of the world's largest, offers a wide array of AI ETFs with high liquidity, making it easy for investors to trade without significant price manipulation and at lower transaction costs.

Industry Growth Potential: The US AI sector is experiencing rapid growth and represents a significant opportunity for investors, with AI ETFs providing a venue for high growth potential.

Abundance of High-Quality Companies: US AI ETFs provide exposure to leading global enterprises, particularly in technology, offering value investors a diversified portfolio and the opportunity to share in the growth and profits of these companies.

Criteria for Selecting Top AI ETFs

When evaluating AI ETFs, Singapore investors should consider several key criteria to make an informed decision:

Track Record: Look for AI ETFs with a history of consistent performance, as historical performance can provide insight into how the fund has performed in different economic scenarios. For example, funds that show steady growth over the years, even during market downturns, may be safer than funds with erratic returns.

Expense ratios: An ETF with a lower expense ratio means more of your investment income stays in your pocket. All other things being equal, funds with lower expense structures may produce better long-term results.

Diversification: A diversified portfolio can mitigate the effects of poor performance by any one company. Choose an AI ETF that diversifies its investments across different types of AI companies. This ensures that if one part of the AI industry faces challenges, other parts can help support the overall performance of the ETF.

Management team: Consider a fund managed by a reputable fund manager with a proven track record in technology and AI. Fund managers with extensive experience in technology investing are more likely to make informed decisions when considering which AI companies to include in their portfolios.

Geographic Exposure: Some AI ETFs may have a greater focus on certain regions or countries, which means that local economic conditions can affect their performance. Given the global nature of AI innovation, ETFs that include companies from geographically diverse regions such as the U.S., China, Europe and Asia (including Singapore) can provide broader exposure and reduce regional risk. Understanding the geopolitical climate and economic health of these regions is critical to predicting the stability and growth potential of ETFs.

Top 10 US Artificial Intelligence ETFs for Singapore Investors

Below are the top 10 U.S. AI ETFs for Singapore investors, giving investors access to a wide range of leading technology companies and an understanding of the growth potential of this dynamic sector. We selected these top ETFs based on a comprehensive set of criteria, including assets under management (AUM), liquidity, management expense ratio (MER) and their focus on AI and related driving technologies. Each of which takes a unique look at the vast field of AI innovation. By exploring these AI ETF options, Singaporean investors can gain a diversified approach to investing in AI and a better understanding of how to incorporate it into their investment strategy.

1. Vanguard Information Technology ETF(VGT)

Vanguard Information Technology ETF investment focus is on companies in the information technology sector of the U.S. market, with a majority of large-cap companies. This characteristic indicates that VGT is less volatile and represents a more value-oriented investment than other funds in the same sector that focus on emerging technology companies. As the largest fund on this list, VGT also has a strong track record, generating a 10-year average annual NAV return of 19.8%.

MER: 0.1%

Div Yield: 0.68%

Fund flows (1Y): $5.89 B

NAV total return (1 year): 24.24%

2. iShares U.S. Technology ETF(IYW)

iShares U.S. Technology ETF is one of the most representative technology ETFs in the U.S. stock market, offering investors a cost-effective avenue to gain exposure to the U.S. technology sector. The fund's most notable feature is its broad range of holdings, which includes over 150 securities.

MER: 0.39%

Div Yield: 0.23%

Fund flows (1Y): $2.83B

NAV total return (1 year): 29.47%

3. Fidelity MSCI Information Technology Index ETF(FTEC)

Fidelity MSCI Information Technology Index ETF aims to provide investors with investment returns that align with the performance of the MSCI US IMI Information Technology 25/50 Index and invests more than 80% of its assets in the securities included in its index. The underlying indexes are primarily representative of the US active information technology sector, which is a highly representative component of U.S. technology stocks.

MER: 0.08%

Div Yield: 0.7%

Fund flows (1Y): $2.08B

NAV total return (1 year): 23.68%

4. First Trust Dow Jones Internet Index Fund(FDN)

First Trust Dow Jones Internet Index Fund tracks the Dow Jones Internet Composite Index, which consists of the 40 largest U.S. Internet companies that derive at least a typical portion of their revenues from Internet services. It also includes a number of companies in the consumer sector. The ETF's largest holding is Apple with 9.74% and the second largest is Alphabet (Google's parent company). According to its official website, FDN has a 10-year annualized payout ratio of 12.3%.

MER: 0.51%

Div Yield: /

Fund flows (1Y): $-1.15B

NAV total return (1 year): 13.02%

5. iShares Global Tech ETF(IXN)

iShares Global Tech ETF offers exposure to the global technology sector in the U.S., Europe and East Asia, and the developments in the AI sector may help it appreciate in price.IXN is highly concentrated in certain sectors, offering exposure to sectors that can rise and fall sharply in a short period of time, and may be particularly useful for investors with a tactical bias or those looking to increase their exposure to the technology sector. Its largest holdings are Apple and Microsoft, with a 37% stake.

MER: 0.41%

Div Yield: 0.48%

Fund flows (1Y): $342.45M

NAV total return (1 year): 24.91

6. iShares Expanded Tech Sector ETF(IGM)

iShares Expanded Tech Sector ETF tracks the S&P North America Expanded Technology Sector Index, which includes 280 select stocks representing the North American communications and consumer discretionary sectors. Six of the seven North American tech giants (excluding Tesla) are among IGM's top 10 holdings, with a total weight of approximately 42%. The ETF includes some of the types of stocks excluded from centralized AI ETFs, such as notable game developers, streaming media and social networks like Pinterest, Netflix, Electronic Arts and Roblox. This strategy makes IGM a more rounded option for investors seeking breadth. It is quite liquid, with an average 30-day bid-ask spread of 0.03%.

MER: 0.41%

Div Yield: 0.22%

Fund flows (1Y): $494.78M

NAV total return (1 year): 30.69%

7. Global X Robotics & Artificial Intelligence ETF(BOTZ)

Global X Robotics & Artificial Intelligence ETF focus on companies that could benefit from the use of artificial intelligence and robotics, such as industrial robotics payrolls, automation companies, and automated driving car companies, among others, BOTZ is a popular AI ETF that is competitive with ETFs on the same topic.

MER: 0.68%

Div Yield: 0.16%

Fund flows (1Y): $ −81.66 M

NAV total return (1 year): 14%

8. ROBO Global Robotics&AUtomation ETF(ROBO)

ROBO Global Robotics&AUtomation ETF invests in cutting-edge global companies that are spearheading advancements in robotics, automation, and artificial intelligence (RAAI). This ETF invests a minimum of 80% of its total assets in securities or depositary receipts that correspond to its index.

MER: 0.95%

Div Yield: 0.05%

Fund flows (1Y): $−276.24 M

NAV total return (1 year): -0.27%

9. iShares Future AI & Tech ETF(ARTY)

The iShares Future AI & Tech ETF(ARTY) is an investment fund that tracks the performance and results of the New York Stock Exchange's FactSet Global Robotics and Artificial Intelligence Index. This index comprises companies in developed and emerging markets that are at the forefront of innovative technologies such as robotics and artificial intelligence. The companies tracked are primarily involved in AI data and infrastructure, AI software, and generative AI businesses. It's worth noting that the fund's assets are more diversified and not all invested in AI companies, favouring cloud computing companies and chipmakers.

MER: 0.47%

Div Yield: 0.8%

Fund flows (1Y): -$52M

NAV total return (1 year): 2.17%

10. FT Nasdaq Artificial Intelligence & Robotics ETF(ROBT)

FT Nasdaq Artificial Intelligence & Robotics ETF investment results align with the pricing and returns of the NASDAQ CTA Artificial Intelligence and Robotics Index, which tracks the performance of AI and robotics companies engaged in technology, industrial, and other related sectors. The fund invests a minimum of 90% of its net assets in the common stock and depositary receipts of its focus companies.

MER: 0.65%

Div Yield: 0.28%

Fund flows (1Y): $26.27M

NAV total return (1 year): -4.07%

DeepSeek's AI Wave: A Transformative Influence

A notable mention in the AI landscape is the emergence of DeepSeek, a company that has introduced a paradigm shift in AI processing. DeepSeek's innovative approach to AI algorithms has demonstrated the potential to significantly reduce the dependency on high-end computing power, traditionally a cornerstone for AI development.

Implications for Singapore Investors:

1. Market Disruption: DeepSeek's technology has the capacity to disrupt the market for AI hardware, potentially impacting the demand for GPUs and other computing components. This could influence the performance of ETFs with heavy exposure to hardware manufacturers.

2. Shift in Focus: As AI algorithms become more efficient, the focus may shift from raw computing power to algorithm optimization. ETFs that include companies specializing in AI software and algorithm development could see increased relevance.

3. Investment Opportunities: The rise of DeepSeek underscores the importance of diversification within the AI sector. Investors should consider ETFs that offer exposure to a broad range of AI-related companies, including those involved in algorithm innovation, to mitigate risks and capitalize on new trends.

4. Long-Term Prospects: While short-term volatility may occur, the long-term prospects for AI remain strong. ETFs that invest in companies with sustainable competitive advantages, such as proprietary technologies or strong research and development capabilities, are likely to perform well over time.

DeepSeek's AI Wave represents a significant development in the AI industry, with implications for investors in US Artificial Intelligence ETFs. By understanding this shift and adjusting investment strategies accordingly, Singapore investors can better navigate the evolving AI landscape and capitalize on the opportunities it presents.

Tips for Investing in AI ETFs

Investing in US AI ETFs requires a strategic approach. Here are some tips to help Singapore investors maximize their returns:

Thorough Research: Understand the composition of ETFs and the basics of the AI industry. Delve into the fund's prospectus to get a handle on the types of companies it holds and their fundamentals. In addition, keeping up with industry reports and analyst opinions can provide insight into current trends.

Risk Assessment: Determine whether the volatility associated with AI ETFs and the volatility that comes with it is within your comfort zone. For example, investing in more volatile leveraged ETFs carries a higher level of risk, while dividend ETFs can provide a steady cash flow. Evaluating your personal situation can help determine the appropriate allocation of AI ETFs in your overall portfolio.

Monitor Performance: Keep a close eye on the performance of the ETF and its underlying companies. Regularly reviewing the fund's net asset value and comparing it to a relevant benchmark, such as the Nasdaq Composite Index, can give you an idea of how the ETF is performing relative to the market.

Track trends: Stay abreast of the latest developments in artificial intelligence technology and its impact on the global economy. Following industry blogs, attending webinars, and subscribing to current events can help you stay on top of the latest breakthroughs and emerging trends. For example, learn how AI is being used to improve supply chain logistics or how AI-powered financial services are transforming the banking industry.

Rebalance regularly: Over time, the performance of AI ETFs may cause your asset allocation to shift from your original plan. Set a schedule to rebalance your holdings, perhaps annually or semi-annually, to reduce positions that are outperforming or add positions that are lagging to ensure that your portfolio remains balanced and aligned with your long-term goals.

Invest in AI ETFs with Moomoo SG

How to invest in ETFs in Singapore? Investing in US AI ETFs through Moomoo SG offers Singapore investors a range of advantages that can enhance their experience and potential for success in the dynamic AI market.

User-friendly Platform: Moomoo SG's intuitive interface simplifies the process of buying and selling AI ETFs. From beginners to seasoned investors, the platform is designed to ensure that everyone can easily navigate the process of selecting and trading exchange-traded funds, making it accessible and less intimidating.

Real-time Data and Analytics: Access to real-time market data and advanced analytics tools enables investors to make informed decisions. Moomoo SG provides detailed information on the performance of AI ETF, including historical data, price charts, and news updates to help you stay ahead of the curve in a fast-paced industry.

Customizable Portfolio: With Moomoo SG, you can customize your portfolio to match your specific goals and risk tolerance. Whether you're interested in a broad AI ETF covering a wide range of tech companies or a more specialized fund focusing on specific AI applications, Moomoo provides the flexibility to build a portfolio that fits your needs.

Educational Resources: Investing in AI exchange-traded funds requires an understanding of potential technology and market trends. Moomoo SG provides educational materials and resources to help investors grasp the complexities of AI and how it impacts investment choices, fostering a more knowledgeable and confident investor community.

Global Impact: Moomoo SG's platform supports investment in international markets by allowing you to utilize global AI ETFs. This feature is particularly beneficial to Singaporean investors looking to diversify beyond their local market and capitalize on the growth potential of global AI innovations.

Customer Support: Dedicated customer support is available to assist with queries and provide guidance to ensure you have the support you need to navigate the complexities of AI ETF investing. Whether you need help with a technical issue or have questions about your investment strategy, moomoo SG's support team can help.

By utilizing these features, Moomoo not only helps make accessing AI ETFs easier but also provides investors with the tools and knowledge they need to make sound investment decisions in this exciting and rapidly evolving industry.

Conclusion

As artificial intelligence continues to transform industries and drive technological innovation, investing in US AI ETFs offers a compelling opportunity for Singapore investors seeking to benefit from this growth. Investors can capitalize on the upside potential of the AI revolution by choosing the right US AI ETFs based on criteria such as track record, management expertise and diversification. Platforms such as Moomoo provide the tools and resources needed to make informed decisions, increasing the accessibility and ease of investing in AI ETFs.

However, it's important to remember that while the potential rewards are great, the risks are just as great. Volatility in the tech sector, rapid changes in AI technology, and macroeconomic factors can all affect the performance of US AI ETFs. It is, therefore, important to manage risk by diversifying your portfolio, keeping abreast of market trends, and regularly adjusting the balance of your investments to match your financial goals and risk tolerance. Through a thoughtful and disciplined approach, investing in US AI ETFs can be a strategic move to build a solid and forward-looking portfolio.