The world of investing is ever-evolving, and the rise of AI-themed ETFs has been a fascinating development. As of April 15, 2026, 47 exchange-traded funds with names that featured the terms “AI” or “artificial intelligence” have emerged, capturing the attention of investors worldwide. These ETFs are diverse, ranging from those focused on large-language models to those investing in infrastructure, hardware, and data that power chatbots and agents. However, the question remains: Are these AI-themed ETFs worth the investment? In my opinion, the answer is a resounding no. Here's why.
Firstly, the average AI-themed ETF is relatively young, with most having come into existence since 2022. While they have been popular with investors, collectively holding around $25 billion in net assets, the performance has been mixed. On the positive side, these ETFs have outperformed the S&P since 2016, but they have failed to beat the Nasdaq 100 Index over the same period. This disparity in performance is concerning and highlights the challenges investors face in this space.
The performance of these ETFs varies significantly, with a 17-percentage-point difference between the top-performing and underperforming funds. This dispersion is three times wider than the return difference among large-blend funds and even exceeds that of funds assigned to Morningstar’s “technology” fund peer group. The reasons for these wide performance disparities are multifaceted. Some ETFs, like the Global X Artificial Intelligence & Technology (AIQ), spread their assets across a broad range of stocks, while others, like the TrueShares Tech, AI, and Deep Learning ETF, concentrate their investments in a smaller number of top picks.
The Global X ETF's success can be attributed to its strategic investments in companies like Netflix, SK Hynix, and Samsung, which have performed well since August 2022. In contrast, the TrueShares ETF's performance has been less impressive, with investments in stocks like Figma, Relay Therapeutics, and Prime Medicine, which have not fared as well. These differences in performance are not random but rather a result of the varying strategies and risk profiles of these ETFs.
From my perspective, the primary issue with AI-themed ETFs is that they are often redundant and add unnecessary risk to an investor's portfolio. If you're already participating in the AI theme through a diversified portfolio like an index fund, there's no compelling reason to invest in a thematic strategy like AI ETFs. Moreover, the timing and magnitude of cash flows from these investments are uncertain, and the market's collective assessment of their worth may be flawed.
In my opinion, the AI theme is still in the process of unfolding, and it's challenging to predict how it will end. The heads of frontier AI labs are not even sure how it will unfold, making it crucial to evaluate the fundamental change in the theme-based strategy you're considering. Additionally, it's essential to understand that you're not buying a narrative but rather a stake in businesses that will generate cash flows in the future. The timing and magnitude of these cash flows are uncertain, and the market's assessment of their worth may be flawed.
In conclusion, while AI-themed ETFs have gained popularity, they are not without their risks and uncertainties. As an investor, it's crucial to carefully evaluate these risks and consider alternative investment options. The world of investing is ever-evolving, and it's essential to stay informed and make informed decisions. Personally, I believe that the market is already pricing in the potential of AI, and investing in AI-themed ETFs may not be the best use of your capital.
