It’s not unusual for a single stock to drop 5-10% overnight. A disappointing earnings report, weak guidance, an analyst downgrade, or even a surprise regulatory development can send shares tumbling in a single session. Those swings can be even sharper in a high-profile, hype-driven industry like artificial intelligence (AI), where expectations run high and investor sentiment shifts quickly.
If you can’t stomach the risk of one company’s fortunes dragging down your portfolio, the solution is simple: go broad. By investing in an exchange-traded fund (ETF), you’re spreading your bet across dozens of AI-related companies instead of relying on just one to deliver. Here are three AI-focused ETFs that can help you sleep at night.
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Passive indexing
If you want a hands-off approach where AI stocks are chosen using a clear, rules-based system, a passive index ETF is a good fit. One standout option is Global X Artificial Intelligence & Technology Index ETF (TSX:AIGO).
This fund tracks the Indxx Artificial Intelligence & Big Data Index for a 0.60% expense ratio, giving you broad exposure to AI innovators from around the world. Because it’s index-based, the selection process is transparent, rebalanced on a set schedule, and doesn’t rely on a manager’s discretion. This can be reassuring if you want to know exactly how your portfolio is built.
Active management
If you prefer to have a team of experts researching, vetting, and adjusting your AI stock exposure, active management offers that oversight. A strong contender here is CI Global Artificial Intelligence ETF (TSX: CIAI).
Despite being actively managed, it’s surprisingly affordable, charging just 0.39%, cheaper than some passive ETFs like AIGO. CIAI’s managers can make changes based on market conditions, sector trends, and company fundamentals, which could be valuable in an industry as fast-moving as AI. For investors who like the idea of a professional team making the calls, this can offer peace of mind.
AI picking stocks
If you want something truly different, Evolve Artificial Intelligence Fund (TSX: ARTI) takes a novel approach by using AI to pick AI investments. It incorporates a large language model from Boosted.ai to assist in selecting its holdings.
This “AI helping to invest in AI” approach is as meta as it gets, but it does come at a higher cost: a 0.60% management fee. While pricier, it might appeal to investors who want to lean fully into cutting-edge technology, both in what the ETF holds and in how those holdings are chosen. It’s a meta-approach to AI investing that’s pretty unique.
The Foolish takeaway
No matter which of these ETFs you choose, you can generally expect them to be less risky than holding a single AI stock. That’s because you’re spreading your investment across dozens of companies instead of tying your returns to the success (or failure) of just one. While these funds will still move up and down with the broader AI industry, they’re not as volatile or dependent on the fortunes of a single business. Over time, that diversification can help smooth out the ride.
