After two years of strong inflows, AI-focused exchange-traded funds (ETFs) are entering a tougher phase. Broad exposure that once amplified gains is now leaving investors concentrated in a small group of dominant tech stocks.Jack Fu, chief executive of Draco Evolution, says many AI ETFs are still built for excitement, not durability. “A lot of investors think they're buying diversified AI exposure,” Fu told Benzinga. But in many cases, they’re buying the same few big tech stocks in different wrappers, he ex ...

Core Insights - The S&P 500 experienced a strong performance throughout the year despite the absence of a traditional year-end rally known as the "Santa Claus rally" [1] Group 1 - The S&P 500 had another fantastic year, indicating robust market performance [1]

Key Points If recent history repeats, artificial intelligence (AI)-focused ETFs will be must-haves for investors in 2026. Data confirm market participants are upbeat on AI investments entering the new year. Before diving in, investors should commit to a few minutes to AI ETF “homework.” 10 stocks we like better than S&P 500 Index › With communication services and technology ranking as the two best-performing sectors in the S&P 500 (SNPINDEX: ^GSPC) in 2025, it's not surprising that market partici ...

Key Points Entering 2026, the AI investment outlook is sturdy. There are dozens of AI ETFs for tech-enthused investors to choose from, and there's a fair amount of variation among them. Some AI ETFs are highly concentrated in a small number of stocks, while others feature more balance. 10 stocks we like better than Global X Funds - Global X Artificial Intelligence & Technology ETF › Many investors are optimistic about the outlook for artificial intelligence (AI) stocks in 2026, with nine in 10 re ...

Core Insights - AI ETFs have limited historical performance data, primarily reflecting trends in bull markets since 2023, with a notable correction in April [1] Group 1: Performance Analysis - Current analysis of AI ETFs is constrained to performance comparisons during unidirectional bull markets, lacking extensive historical data across different market cycles [1] Group 2: Analyst Background - The analyst has over 20 years of experience in quantitative research, financial modeling, and risk management, focusing on equity valuation and market trends [1] - Previous experience includes a role as Vice President at Barclays, leading teams in model validation and stress testing, indicating a strong foundation in both fundamental and technical analysis [1] - The analyst collaborates with a research partner to provide high-quality, data-driven insights, emphasizing a long-term perspective on value creation [1]

AI ETF Landscape - Wedbush launched an AI-focused thematic ETF with the ticker IV, aiming to provide investors a way to invest in the AI theme [2][4] - The IV ETF is a concentrated portfolio of 30 dynamic names, rebalanced quarterly based on research into technologies driving AI and derivative beneficiaries [4][5] - Vetify indicates advisors are allocating roughly 5% to 10% of their portfolio for dedicated thematic investing, including AI [9] - Thematic ETFs, including AI-focused ones, can charge a higher premium than broad index-based products due to their specialized construction [13] Investment Strategy & Focus - The IV ETF's stock selection is based on identifying companies driving AI use cases and their derivative beneficiaries, with a current focus on software [6][8] - The fund's weighting is a combination of market views and conviction, with higher conviction names like Nvidia and Palantir positioned at the top [18][19] - Wedbush believes the market is underestimating the growth potential of the AI revolution and views geopolitical events as opportunities to buy tech stocks cheaper [29] - Software is considered a key area within AI, with potential for M&A and significant growth, while autonomous and robotics are viewed as the "golden goose" for AI [34][36] Market Dynamics & Considerations - Investors are becoming more accustomed to volatility, with increased interest in fixed income ETFs and broadly diversified ETFs like Vanguard 500 [23][24] - While tech was a safe haven in 2020, investors are now diversifying into defensive sectors like utilities and consumer staples [26][27] - It's important to avoid double-counting exposure when investing in thematic ETFs, ensuring they don't overlap with existing large-cap strategies [32] - Active management is gaining popularity in the ETF space, with 40% of flows in the first five months of the year going into active ETFs [37]