Dramatic jump in AI ETFs despite rough quarter
Wall Street invests heavily in exchange-traded funds that provide investors with exposure to artificial intelligence, according to JP Morgan Asset Management.
The firm’s “ETF Guide,” published this month, ranks it among the top five themes by assets under management, despite the volatility that hit the group in the second quarter.
“A lot [themes] “We’re shifting toward AI and the ecosystem surrounding AI,” Jon Maier, the firm’s chief ETF strategist, told CNBC’s “ETF Edge” this week.
Maier, who led the insight team that published the report, also highlighted an overlapping relationship between AI-themed ETFs and infrastructure.
“This all feeds into the AI story…applications, energy [and] AI models,” he said.
Going with the flow? ETFs and mutual funds
JPMorgan’s ETF Guide also found that overall mutual fund inflows are decreasing meaningfully as more money flows into ETFs.
Stating that the data in the report shows negative inflows into investment funds in the last few years, Maier said, “This will continue like this.”
He also suggests that ETFs are becoming more attractive to retail investors due to tax advantages.
“They generally don’t pay capital gains [tax]” he said.
Mutual funds are a different story, Maier suggests.
“Imagine buying a mutual fund in 2022 and facing a 20%, 30%, 40% loss, depending on what part of the market you buy, and you still have a 6% capital gain. You’re not happy,” he said.
