DWS: The opportunities artificial intelligence provides ETF investors

Mar 20th, 2019 | By | Category: Equities

By Eric Wiegand, Head of Xtracker’s Sales Strategy Europe & Asia Pacific, DWS.

Eric Wiegand, Head of Xtracker's Sales Strategy Europe & Asia Pacific, DWS.

Eric Wiegand, Head of Xtracker’s Sales Strategy Europe & Asia Pacific, DWS.

Artificial intelligence (AI) opens up a wide range of possibilities. Although research has been going on for 70 years now, the enormous growth potential of technologies based on artificial intelligence is only now becoming increasingly apparent in practice.

The decisive difference is that accelerated computing power, enormous storage capacities, and large amounts of data are required in order to make use of the possibilities offered by AI. These prerequisites have been met today, and the use of AI has become much more attractive for companies.

According to studies, AI will have the strongest impact on the aviation, high-tech and insurance sectors (based on percentage of industry revenue).

Participating in the growth market of ‘megatrends’

The expected annual growth of the market for AI solutions is forecast at 50%. The expected revenue from AI solutions is expected to grow to $89.8 billion by 2025. Last year, it was $7.3 billion (Source: Statista.com).


Xtrackers Future Mobility UCITS ETF

– Tracks the Nasdaq Global Yewno Future Mobility

– Provides exposure to firms poised to benefit from
the sub-themes of autonomous vehicles, electric and
hybrid vehicles, and electric and lithium batteries.

– Trades on Deutsche Börse under the ticker XMOV GY.

Xtrackers Artificial Intelligence and Big Data UCITS ETF

– Tracks the Nasdaq Yewno Artificial Intelligence and
Big Data Total Net Return

– Provides exposure to firms poised to benefit from
the sub-themes of deep learning, cloud computing,
image recognition, speech recognition and chatbots,
and natural language processing.

– Trades on Deutsche Börse under the ticker XAIX GY.

Each fund is physically replicated, trades in US dollars,
and comes with a total expense ratio (TER) of 0.35%.

Since AI has such high potential, it is not surprising that more and more investors want to participate in this growth market of future trends and are increasingly demanding investment products geared to it. So far, however, it has not been easy to invest in megatrends such as AI – but also big data or autonomous driving – because traditional sectors do not sufficiently cover these topics or only represent data from the past.

With the further development of investments in the direction of forward-looking investing, products are available today that deal specifically with the issues of the future.

Thematic investing is primarily about investing in the megatrends of the future and thus directly participating in the growth opportunities of future topics. In principle, both actively managed funds and passive ETFs are suitable for thematic investing.

In the case of an ETF, however, specially designed, thematically structured indices are required. In contrast to classic indices that look backwards, thematic indices focus on companies that are leaders in future-oriented topics. Thematic indices identify those companies that stand out as pioneers in the development of revolutionary technologies.

At its core, the index construction contains a forward-looking component that focuses on companies that have competitive advantages in future sectors. The first step is to identify the relevant sub-sectors. In the megatrend AI, it is important to invest in three key areas. The decisive factors are the collection and processing of data, the immense computing power and intelligent software required for this, and applications such as speech recognition and cyber security.

DWS’s new thematic ETFs provide easy access to these sub-industries, which are at the forefront of AI development and implementation.

(The views expressed here are those of the author and do not necessarily reflect those of ETF Strategy.)

Tags: , , , , ,

Leave a Comment