Our pick of the best AI funds is above, including the selection criteria used to select the companies for inclusion in each fund.
The criteria result in significant differences between portfolios, with some US large-cap funds (including Microsoft and NVIDIA) while others focus on mid-caps such as SentinelOne and C3.ai.
Brewin Dolphin’s Moore comments: “Investors should have a clear view of the breadth of tech ‘conglomerates’ like Microsoft.
“From my point of view, it would be wise to stay with more established companies with the ability to invest heavily, such as Apple, Alphabet, Microsoft, Experian and RELX, which are all great operators, winners in their field, cash generators and investors. plenty of capital to hold their positions.”
Ms Hutchinson also points out the risks of investing in more speculative AI companies: “You have to take into account if there are small and mid-cap companies in the fund, which probably give a very good upside, but can mean you’ll go through some volatile stock market movements.
Another option is to invest in adopters, as well as developers, of AI technology.
Sanlam’s Mr Ford says: “We strongly recommend investing in funds that can invest in companies using and implementing AI, rather than just focusing on those providing the enabling technologies.
“This means a much broader set of opportunities. Some of the most exciting AI opportunities are in non-tech sectors like healthcare. Similarly, in the industry, John Deere has developed fully autonomous tractors that would not be possible without AI.
“Enabling Technologies [semiconductors and related areas] They are some of the most cyclical areas of the market, and therefore among the most volatile; therefore it makes sense to diversify exposure to more stable growth in areas like healthcare.”
Ms. Hutchinson also recommends that investors look at potential overlap with other funds in their portfolio: “There is a relatively heavy weighting of US equities in the IA ETFs, although some products that also focus on the theme of robotics have more decent exposure to Japanese stocks. ”
Investors seeking ESG (environmental, social and governance) investments may have concerns about the ethics of AI technology, such as facial recognition, and its potential for misuse. With this in mind, some funds use ESG criteria to evaluate potential AI investments.
