The world of artificial intelligence (AI) investments can be overwhelming, especially when it comes to choosing individual stocks or tracking expensive index funds. However, a unique solution is available in the form of the Ark Autonomous Technology & Robotics ETF (ARKQ). This actively managed fund offers a distinct approach to AI investing by diversifying into smaller and mid-cap stocks that are often overlooked by traditional AI-focused funds.
In contrast to most AI index funds, which tend to concentrate on mega-cap tech companies like Nvidia, Alphabet, and Broadcom, the Ark Autonomous ETF has a more concentrated portfolio with 35 stocks. Notably, it excludes these large players in favor of smaller companies like Teradyne, Kratos Defense & Security, Rocket Lab USA, and Archer Aviation.
These lesser-known stocks offer significant potential for growth, with combined market caps that are just over 1% of Nvidia’s. For instance, Teradyne, a $23 billion market cap robotics company, and Archer Aviation, valued at about $4.8 billion, both have substantial home run potential.
While the fund’s 0.75% expense ratio is higher than some passive AI ETFs, it’s still competitive with traditional index funds. The key advantage of ArkQ lies in its actively managed approach, which allows tech investor Cathie Wood to select the best AI opportunities and potentially outperform benchmark indexes.
By investing in the Ark Autonomous Technology & Robotics ETF, investors can gain exposure to a diverse range of AI stocks beyond the usual suspects, while minimizing excessive fees. This fund offers an attractive solution for those seeking to diversify their AI investments without sacrificing potential returns.
Source: https://www.fool.com/investing/2025/01/11/this-top-artificial-intelligence-etf-invests-in-ai