Artificial intelligence (AI) has been a hot investing trend for over a year now, thanks to the growing popularity of ChatGPT. The danger for investors, however, is that valuations have been getting out of control for many AI stocks. And that means you could end up holding very expensive stocks at a time when the market may be due for a correction.
One way to reduce some of your risk is by investing in an exchange-traded fund (ETF) focused on generative AI. The Generative AI & Technology ETF (NYSE Arca:CHAT) has been around for less than a year but already its returns since May of last year total 35%. The ETF holds positions in many of the top AI names, including Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Meta Platforms (NASDAQ:META). There are, however, other plays, such as Baidu (NASDAQ:BIDU) and Salesforce (NYSE:CRM) that may be less obvious options for investors but that may also benefit from generative AI.
This is an actively managed fund which means there will be changes over time to the stocks that it holds, and that can be helpful for investors who don’t want to have to keep up with the latest AI trends. But at the same time, that means the fund’s expense ratio won’t come cheap; at 0.75%, it’s a fairly expensive ETF. But if it can help deliver significant gains for AI investors, it could prove to be well worth it.
If you’re a ChatGPT and AI fan who doesn’t want to keep track of all that’s going on in the AI world, this is an ETF you should consider putting in your portfolio.
