The Best Artificial Intelligence ETFs to Buy in Canada in December 2024

ByDan Kent Published On:

Artificial intelligence stocks have exploded in popularity as of late. With the evolution of Chat GPT, autonomous cars, and even AI bots in healthcare to improve the hands-on education students will get, it seems like AI is touching every area of the economy.

Despite the industry’s massive size at this point, artificial intelligence is clearly in its infancy. For investors, this creates an enormous opportunity to get exposure to the industry and reap the benefits of its growth.

However, this is easier said than done. Picking individual stocks in the AI sector poses significant risks. Valuations are high, and the performance of many of the companies exposed to AI will need to be perfect for the price to continue appreciating.

I like to call this “priced to perfection.”

So, for many investors, buying the entire industry via an AI ETF will likely be the route they take. Instead of picking the wrong horse in the race, you can buy a basket of stocks exposed to artificial intelligence, and if one company inside the portfolio stumbles, it will have a muted impact on the ETF as a whole.

This is the beauty of exchange-traded funds.

For this reason, we’re going to dive into five of the best AI ETFs to buy here in Canada right now.

What are the top AI ETFs in Canada right now?

  • Horizons Big Data & Hardware ETF (TSE:HBGD)
  • Horizons Robotics & AI ETF (TSE:RBOT)
  • Evolve Artificial Intelligence ETF (TSE:ARTI)
  • Global X Artificial Intelligence & Technology ETF (AIQ)
  • Global X Robotics & Artificial Intelligence ETF (BOTZ)

Horizons Big Data & Hardware ETF (TSE:HBGD)

The Horizons Big Data & Hardware ETF (TSE:HBGD) is one of the lesser-known funds in Canada. With assets under management of under $20M, considering the fund’s outstanding performance, I’m surprised it hasn’t had more inflows over the last few years.

The fund has been around for quite some time, starting in mid-2018. Its primary focus is to track a portfolio of global companies focusing directly on data development, storage, and management-related services and solutions.

So, what does this have to do with artificial intelligence? Primarily the data development and storage end. Many of the major players in the AI space haven’t directly benefitted from AI itself, but the data centers required.

Case in point, look at NVIDIA’s data center growth over the last few years. The numbers are mind-blowing.

This isn’t expected to slow anytime in the near future either, as more and more companies require more infrastructure and data centers to build platforms.

The fund’s top holdings include some of the best companies with AI exposure in North America, including Super Micro Computer (SMCI), NVIDIA (NVDA), and Micron Technology (MU).

The fund has a unique twist in the fact it contains exposure to companies who are involved in the cryptocurrency space as well. Two that come to mind are Coinbase (COIN) and Cleanspark (CLSK).

With management fees of 0.55%, meaning you’ll pay $5.50 annually for every $1000 you have invested in the fund, on the surface, they seem high. However, the outstanding performance of the fund over the last few years has made the fees well worth it.

In fact, it has been one of the best-performing exchange-traded funds in Canada since its inception.

Horizons Robotics & AI ETF (TSE:RBOT)

The Horizons Robotics & AI ETF (TSE:RBOT) is more popular than the Big Data ETF above but is still relatively unknown, with assets under management of just over $50M.

For someone who wants a pure-play artificial intelligence ETF without crypto exposure, this is one to add to your watchlist.

The fund is an index fund aiming to track the Global Robotics & Artificial Intelligence Thematic Index. Its main objective is to track top-quality companies that specialize in robotics and artificial intelligence.

This is why some of the top AI and robotic companies are in its holdings, including NVIDIA, Intuitive Surgical (ISRG), Keyence (KYCCF), and SMC Corp (SMECF).

Many of these companies, on the surface, will be primarily listed as companies that focus on automation. But make no mistake about it, their businesses stand to benefit significantly from artificial intelligence.

The fund has significant international exposure, with the bulk of its focus on Japan and the United States. Horizon’s Big Data ETF, on the other hand, is more focused on the US and Taiwan.

 It has fees of 0.6% and a relatively small distribution yield of 0.1%. If you’re going to buy this one, you are certainly doing so with the objective of total returns, not income.

Evolve Artificial Intelligence ETF (TSE:ARTI)

The Evolve Artificial Intelligence ETF (TSE:ARTI) is the freshest fund on this list, making its debut in March 2024. With under $10M in assets under management, it is certainly a small fund.

This may lead some people to worry about liquidity. However, it’s important to understand that the bulk of an ETF’s liquidity comes from its underlying holdings, not the fund itself.

In this case, it includes some of the largest AI companies in the United States. Alphabet (GOOG), Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and NVIDIA lead the charge, all with double-digit weightings in the portfolio.

Many of these large-scale technology companies are at the forefront of AI innovation.

Unlike the two Horizons funds listed above, which have plenty of international exposure, ARTI is pretty much a pure-play US option, with 98% of its holdings from the United States.

The fund’s fees are 0.6% at the time of writing, meaning you’ll pay $6 annually per $1000 invested. This isn’t that high of a fee, considering it gives you exposure to over 50 top AI stocks in the United States.

With the fund being so new, it does pose the risk that if it doesn’t become popular, they could close it down. However, considering the large-scale popularity of artificial intelligence, I think the Evolve Artificial Intelligence Fund should be given a strong opportunity to succeed and grow.

Global X Artificial Intelligence & Technology ETF (AIQ) 

The final two funds on this list will be US-based ETFs. We simply don’t have enough fund managers that produce them here in Canada, so I figured I would include some larger US-based funds.

Global X Artificial Intelligence & Technology ETF (TSE:AIQ) is certainly one of the largest, with over $1.6B in assets under management at the time of writing. It has also been one of the better-performing US-based AI ETFs recently.

The fund started in 2018 and has exploded in popularity in 2023 when the AI-boom really started to take off.

Its top holdings contain the likes of NVIDIA, Tencent Holdings (TCTZF), Meta Platforms (META), Netflix (NFLX) and Qualcomm (QCOM).

Like the other funds on this list, AIQ pays a low distribution of 0.15%. You should definitely invest in this fund as a total return strategy based on the AI sector.

In terms of fees, it comes in at some of the highest on this list as well at 0.68%, meaning you’ll pay $6.80 annually for every $1000 you have invested.

Thus far, Horizon’s Big Data ETF has outperformed this by quite a wide margin. However, it’s important to understand these funds certainly aren’t apples to apples. While Horizons has benefitted significantly from having exposure to the data end of AI, this fund is more on the AI solutions end of things.

It is difficult to say what will perform best moving forward. Some experts believe the data center end of the spectrum will slow, and those offering more AI solutions will outperform. However, as AI continues to develop and expand, the demand for data centers will remain.

Global X Robotics & Artificial Intelligence ETF (BOTZ)

The Global X Robotics & Artificial Intelligence ETF (TSE:BOTZ) is the largest fund on this list, sitting at assets under management of just over $2.5B. Starting in 2016, the fund is also the oldest out of the five listed on this list.

Much like Horizon’s robotics ETF, the fund has plenty of international exposure. The bulk of it is to Japan, but there is also a mid-double-digit weighting to developed European countries. Just shy of half of the portfolio is allocated to US equities.

It has many of the major US players as top holdings but also holds international companies such as ABB (ABLZF), SMC Corp (SMECF), and Fanuc Corp (FANUF).

The fund benefitted significantly during the post-pandemic market surge and witnessed an extensive drawdown in 2022 when tech stocks retracted significantly. Make no mistake about it: This fund is going to be volatile. Prior to purchasing it, one would need to understand if it fits within one’s overall tolerance for risk.

Its distribution is small, at 0.19%, and its fees are the same as AIQ’s, at 0.68%.

Overall, these five funds are a good start

Here in Canada, we don’t have much choice when it comes to AI ETFs. Our market simply isn’t big enough, and many major fund managers, such as Blackrock, BMO, and Vanguard, haven’t adopted artificial intelligence ETFs in Canada.

However, with the industry being so young, I wouldn’t be surprised if I continually added new funds to this list as more are brought to market.

If you’re interested in getting exposure to AI, chip development, database development, or even robotics, these five funds are certainly worth adding to your watchlist.