Dan Ives, a tech analyst at Wedbush Securities, recently launched the Dan Ives Wedbush AI Revolution ETF (IVES). The ETF surpassed $100 million in assets under management within its first five trading days, highlighting the increased demand for AI exposure. IVES seeks to capitalize on the rapid growth of artificial intelligence by investing in companies poised to lead the AI transformation.
The ETF tracks the Solactive Wedbush Artificial Intelligence Index and is well diversified across 30 stocks, with each firm comprising no more than a 5.7% share. Microsoft, NVIDIA, and Broadcom are the fund’s top three holdings. The ETF offers diversified exposure across key AI segments, including semiconductors, hyperscalers, cybersecurity, cloud, robotics, and consumer platforms.
It has an expense ratio of 0.75%, which is higher than that of large-cap tech ETFs like QQQ, but reasonable for a thematic strategy. Ives believes that software is the next big growth area in the AI sector. “Software is going to be driving a lot of the use cases,” he said.
“But it’s crucial to understand: Who within software qualifies?
AI investment potential
Simply mentioning ‘AI’ in a conference call doesn’t make a company an AI player.”
The ETF’s portfolio comprises 30 companies across various industries, including hyperscalers, cybersecurity, consumer platforms, and robotics.
Oracle is among IVES’ top holdings, with its shares up nearly 62% over the past two months. Other software holdings, such as Palantir, have also performed well, with shares soaring more than 47%. Ives plans to reevaluate the AI 30 every quarter, potentially adding new companies that become significant AI players.
He maintains that tech investments are valuable even for those who have missed out on previous growth. The global AI market is experiencing remarkable growth, driven by key factors including the widespread adoption of digital technologies, growing awareness of AI’s potential, and increasing demand for convenient online services. A new UN Trade and Development report projects the global AI market to soar from $189 billion in 2023 to $4.8 trillion by 2033, representing a 25-fold increase in just a decade.
Though the AI theme space is crowded, there is scope for the Dan Ives Wedbush AI Revolution ETF due to its strategic structure and diversification. The new ETF would face fierce competition from Global X Artificial Intelligence & Technology ETF, iShares Future AI & Tech ETF, and Defiance Quantum ETF, which manage billions in AUM each. With more than $100 million in assets, the market sees potential in IVES.
Whether IVES becomes a top-tier AI ETF will depend on its long-term performance relative to both broader indices and other thematic funds.