AI Investments in the UK: Best AI ETFs

Are you considering an AI investment? If you’re not, perhaps you should be. AI (Artificial Intelligence) is already big business and will only get bigger. If you want information on AI investments, you’ve come to the right place. This Moneyfarm insights blog focuses on investing in AI technology. We will tell you what the investment opportunities are, including a discussion on AI ETF accounts and how to go about setting one up.

What AI Means

The initials “AI” – “ai” in lower case, stand for Artificial Intelligence. It’s a special technology that aims to enable computers to think and act for themselves in a more human way. The way it does this is by extracting information from its surroundings and then using that information to work out answers and responses to situations.

It can be used to impact the way we live and work and use our spare time.

As artificial intelligence (ai) advances and evolves, it becomes more clever and astute thanks to machine learning. This enables computers to learn from the mistakes they make and take a different approach to a problem or situation next time round.

Generative AI and OpenAI

There is also a branch of AI known as “generative AI,” which, as the name implies, can, in addition to text, generate things like code, images, music, speech, and video. One such company operating in this particular sector is OpenAI. It was founded as a non-profit organisation in 2015 by Elon Musk, Sam Altman and others.

OpenAI is an AGI research and deployment company, probably best known for its AI text generator, ChatGPT (GPT-3). OpenAI is rated as one of the top 3 AI labs on the planet and is thought to be worth in the region of $20 million. Currently, the company is not publicly traded, so you won’t find an OpenAI stock price.

Wannabee OpenAI investors will just have to kick their heels until OpenAI decides to raise capital via an IPO, if that time ever arises. The only other way to invest in OpenAI, in a roundabout way, would be through association, by perhaps buying some Microsoft stock.

Why artificial intelligence is important to investors

The AI industry will reform all aspects of our lives. It will impact what we eat, how we work, the way in which industrial machines are monitored and managed, how healthcare gets delivered, and how we meet the climate change challenge. From the point of view of investing, AI investment has huge potential.

Here in the UK, Prime Minister Rishi Sunak, and Michelle Donelan, the Technology Secretary, have recently pledged £100 million to help to establish the Foundation Model Taskforce, whose task will be to help the UK develop its own “sovereign” AI to ensure that as a nation we are competitive in the global AI world. This comes alongside approximately £900 million, which has also been allocated in the budget for AI research and developing an exascale computer model capable of completing in excess of one quintillion calculations in one second.

AI as a thematic investment

There are many AI companies to invest in, but you would be wise to consider which AI investment vehicle you should choose. A relatively new approach is something called thematic investing, a new investing initiative which Moneyfarm has recently added to its offerings.

While AI stock trade is one approach, picking individual stocks in any industry can be risky. The stock market can be a pretty volatile place, and holding individual shares might make you vulnerable to sudden price drops. With our thematic approach to investment, that risk could be lowered because of the core-satellite stance we use.

You can invest in many growth industries thematically, not just an AI investment. Our investment themes 2023 also include things like the blue water and clean water sectors. Other sectors include EV cars, clean, renewable energy, infrastructure, and the healthcare market.

With our core-satellite approach, only a relatively small percentage (between 5% and 20% of your core portfolio) can be allocated to growth theme satellites. It’s medium to high risk, but as a long-term investment, the cap we impose is a way of helping to limit your exposure.

The best AI stocks to look out for

If you are a savvy investor, you know how to invest money, you know how to do market research, and you are familiar with how share trading works, and you gave a good investment plan, stock picking is an option. According to Forbes, the top 5 best AI companies with the best AI stocks for 2023 are:

1. Adobe (ADBE)
2. Alphabet (GOOGL)
3. Amazon (AMZN)
4. Baidu (BIDU)
5. C3 AI (AI)

Although outside the top 10 at the time of writing, other stocks to keep an eye open for include:

• Air Liquide
• Benevolent AI
• Big Bear

Why you should choose AI ETFs

Earlier, we mentioned thematic investing and explained what advantages it can offer over stock picking. But what are thematic investments advantages driven by? They are underpinned and driven by ETFs.

Moneyfarm’s core-satellite approach to thematic investing is one way of safeguarding how much you can invest in (medium to high-risk equities). Risk is also addressed by investing long-term in ETFs rather than individual stocks.

What is an ETF? An ETF can best be described as a basket holding a wide variety of assets in a cross-section of companies in different industries. This wide variety provides your portfolio with inbuilt diversification, and it is one of the most commonly acknowledged ways of helping to reduce risk. When you throw in the extra diversity you get from the growth industries mixture that our thematic approach offers, you get the best of all worlds in terms of risk management.

It is obvious that AI ETFs focus on artificial intelligence, but with Moneyfarm’s thematic investment options, if you choose our technology growth theme, you not only invest in an AI ETF, you also invest in clean energy, e-commerce, electric cars, and semiconductor focussed ETFs too.

As an example, as well as investing in the WisdomTree Artificial Intelligence UCITS ETF, you could be investing in a clean energy stock like Air Liquide. A little information about each follows.

WisdomTree Artificial Intelligence UCITS ETF USD Acc

The WisdomTree Artificial Intelligence UCITS ETF USD Acc comprises of assets worth over EUR 350 million and has been set up to track the Nasdaq CTA Artificial Intelligence index, encompassing of businesses categorised by the CTA (Consumer Technology Association) as either an Enabler, Engager, or Enhancer of AI activity. At the time of writing, the stock is priced at EUR 41.43.

Air Liquide stock

Air Liquide is a pioneer in the production of hydrogen. It can help to reduce CO2 emissions, develop clean transportation, and limit the use of fossil fuels. They have recently joined forces with TotalEnergies to develop a network of more than 100 hydrogen stations for fuelling heavy-duty vehicles across Europe. At the time of writing, Air Liquide stock is priced at EUR 160.60.

How to invest in AI ETF with Moneyfarm

If you want to invest in AI stock, you can invest in ETF AI focussed portfolios by clicking “Get Started” at the bottom of the blog entitled “Welcome to Thematic Investing” on the Moneyfarm website.

Moneyfarm Share Investing: Smart, simple, secure

Want to trade AI ETFs or AI stocks, look no further. Moneyfarm unveils its Share Investing platform, a direct and user-friendly method for stock market engagement. Available through both a web interface and a mobile app, it facilitates the immediate purchase and sale of shares. The platform provides a vast selection of individual UK stocks, ETFs, and UK mutual funds, allowing for involvement in diverse market sectors and investment styles.

It also offers the opportunity to invest in a globally diversified, professionally managed portfolio, ensuring a range of options that align with your investment strategy and financial objectives. Our service is designed with a long-term investment perspective, ensuring you benefit from our advanced technology and the expert guidance of our investment consultants. This approach helps you tailor your portfolio to your values and financial goals, offering a comprehensive view of your investments for effective decision-making.

Moneyfarm’s Share Investing platform supports your investment journey, whether you’re investing in familiar companies, exploring various sectors, engaging with ETFs, or expanding your scope with our UK Mutual Funds, providing a personalized and insightful investment experience.

Frequently asked questions

Investing in an AI ETF – is it worth it in 2023?

Those looking to diversify their portfolio and gain exposure to the AI industry may find that investing in an AI ETF is a good option. AI is one of the strongest megatrends there is, which is the main reason why you should invest now but only long term, and the sooner you start, the better.

However, there is always a risk associated with investing, and past performance does not guarantee future results. So it’s critical to conduct your own research and make an educated choice based on your individual financial situation, level of risk tolerance, and investment objectives.

Is thematic investing suitable for short-term investing

Thematic investment might not be appropriate for short-term investing. Thematic investing is often a longer-term investment strategy that calls for patience and a long-term perspective.

While growth themes can offer medium to high returns in the long term, in the short term, they can be subject to market volatility. The risks and possible rewards of a thematic investment should therefore be thoroughly considered before making any investment decisions.

What is the potential growth of AI investments in the UK?

PWC estimates indicate that the UK AI market might develop significantly and increase the UK’s GDP by 10.3% by 20230, reaching a potential value of £232 billion.

Am I limited to just one thematic investment growth theme?

No, you can invest in all four of our thematic growth themes. Once you apply, our team of experts at Moneyfarm can help you to maximise your thematic investing to help minimise risk and ensure you aren’t overexposed.