Global X launches AI and big data ETF

May 17th, 2018 | By | Category: Latest news

Global X Funds has launched the Global X Future Analytics Tech ETF (AIQ US) on Nasdaq Exchange. The fund provides access to companies that are generating vast amounts of data and developing proprietary artificial intelligence (AI) systems to derive actionable insights from that data.

Alex Ashby, director of product development at Global X

Alex Ashby, director of product development at Global X.

Artificial intelligence refers to the process of machines or computers performing tasks that would otherwise require human intelligence. In order to attain the capabilities to perform those tasks, AI relies on utilizing and processing large amounts of data, or “big data”, to learn.

As the accumulation of data continues to grow, so does the potential of AI systems. According to research conducted by PWC in June 2017, the emergence of AI could contribute up to $15.7 trillion to global GDP in 2030 – more than the current output of China and India combined.

“Given AI’s potential to impact a variety of sectors, we believe it is poised to become one of the most significant technological innovations of the modern era,” said Alex Ashby, director of product development at Global X. “Our aim with all of our technology-thematic funds is to provide efficient access to the companies leading the charge in the world’s most disruptive trends. AIQ seeks to provide investors with exposure to the long-term growth potential of the big data and artificial intelligence theme.”

The fund tracks the Indxx Artificial Intelligence and Big Data Index, which is composed of companies listed in developed markets. The index is divided into two categories based on sub-industry: category 1 comprises firms developing AI technology or offering AI-as-a-Service (AIaaS) for big data analytics, while category 2 comprises firms producing AI hardware or developing quantum computing technology.

To be eligible for inclusion in the index, companies must have a minimum market capitalization of $2 billion (for category 1) or $500 million (for category 2).

The top 60 securities from category 1 (based on their perceived exposure to the underlying sub-industry) and top 25 securities from category 2 will be selected for final index inclusion.

The index is market cap-weighted with a security cap of 3%. Securities with an exposure score less than 20% receive a security cap of 1%. The index is reconstituted annually in January and rebalanced on a semi-annual basis.

Although the index has a global reach, over three-quarters (77.5%) of its exposure is in stocks listed in the US. The next largest exposures are Cayman Islands (9.3%), Germany (4.3%) and Canada (2.5%).

As is to be expected, the index is primarily exposed to the information technology sector which accounts for 81.3% of the total weight, followed by industrials (11.3%) and consumer discretionary (6.1%).

AIQ has an expense ratio of 0.68% and distributes income generated within its portfolio to investors on an annual basis. The fund has been launched with seed capital of $50 million.

It is the seventh ETF in Global X’s $3.9bn “Thematic-Technology” suite of ETFs which also includes a play on the “Internet of Things” theme.

According to Global X, the “Internet of Things” theme is closely related to, and a key driver in, the exponential growth of available data. The “Internet of Things” turns everyday objects into internet-connected devices capable of generating and receiving data.

The Global X Internet of Things ETF (SNSR US) invests in companies involved in the development and manufacturing of semiconductors and sensors, integrated products and solutions, and applications serving smart grids, smart homes, connected cars, and the industrial internet. It has AUM of $110m and an expense ratio of 0.68%.

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