Artificial intelligence (AI) is a hot investment theme at the moment. And for good reason. Over the next decade, the technology is set to disrupt nearly every industry.
Looking to get exposure to AI through investment funds? Here are three products to consider.
Sanlam Global Artificial Intelligence
One of my top fund picks for the AI revolution is Sanlam Global Artificial Intelligence. This is a global fund that invests in companies engaged in AI, whether that’s businesses providing AI-related services or organisations adopting such services.
I really like the portfolio here. At 31 July, the top three holdings in the fund were Nvidia, Alphabet and Microsoft. These are some of the best AI stocks on the planet, to my mind.
I also like the low fees. Through Hargreaves Lansdown, ongoing charges are just 0.5% a year (plus Hargreaves’ platform fees).
This fund has an excellent long-term performance track record, having delivered a return of nearly 100% over the last five years.
It can be volatile though. Last year, for example, it produced disappointing returns as tech shares fell.
Polar Capital Artificial Intelligence
Another fund that offers exposure to the theme is Polar Capital Artificial Intelligence. This also takes a broad approach to AI, investing in both enablers of the technology and beneficiaries.
Again, I like the portfolio here. Within the top 10 holdings there are some great companies including the likes of Nvidia, Alphabet, Advanced Micro Devices and Amazon. All these businesses are at the forefront of the AI revolution.
However, on the downside, this fund has a performance fee. This is 10% of any returns the fund achieves above its benchmark, the MSCI All-Country World Net TR Index (GBP). This could eat into investors’ returns.
Performance hasn’t been as impressive as the Sanlam fund. Over the last five years, this fund has returned about 66% (which is still a great return).
Blue Whale Growth
Finally, it’s worth highlighting Blue Whale Growth. Now this is not a pure AI fund. However, at present, it does offer a lot of exposure to the theme.
For example, the top 10 holdings at the end of August included Nvidia, ASML, Lam Research, Adobe and Veeva Systems. All of these businesses look set to benefit from the growth of AI in the long run. For example, ASML and Lam Research, which make computer chip manufacturing equipment, should benefit from increased demand for chips.
A risk here is that the fund is quite concentrated in nature. It only holds about 30 stocks, which means its value can be impacted by fluctuations in individual stocks.
However, performance over the long term has been impressive (it’s up about 55% over the last five years). And with portfolio manager Stephen Yiu bullish on AI, I think it’s well placed to deliver solid returns going forward.
|
Fund |
1-year return |
3-year return |
5-year return |
|
Sanlam Global Artificial Intelligence |
17% |
28% |
99% |
|
Polar Capital Artificial Intelligence |
16% |
23% |
66% |
|
Blue Whale Growth |
19% |
11% |
55% |
The post 3 top investment funds for the artificial intelligence (AI) revolution appeared first on The Motley Fool UK.
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Edward Sheldon has positions in ASML, Alphabet, Amazon.com, Hargreaves Lansdown Plc, Lam Research, Microsoft, Nvidia, Blue Whale Growth, and the Sanlam Global Artificial Intelligence fund. The Motley Fool UK has recommended ASML, Alphabet, Amazon.com, Hargreaves Lansdown Plc, Lam Research, Microsoft, Nvidia, and Veeva Systems. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2023
