Murphy: ETFs used to widen AI exposure, curb single-stock risk
VettaFi research director Cinthia Murphy noted investors are using ETFs such as THNQ to gain broad AI value-chain exposure and reduce single-stock volatility.
Cinthia Murphy, director of research at VettaFi, noted in a recent broadcast appearance that investors are increasingly using exchange-traded funds such as the ROBO Global Artificial Intelligence ETF (THNQ) to gain broad exposure to the AI value chain and reduce volatility tied to single-stock bets.
Murphy observed many investors find it difficult to identify long-term winners in the AI sector. She noted individual stocks can lead one day and lag the next, creating volatility some investors prefer to avoid.
THNQ holds companies across the AI ecosystem, including chip makers and other hardware firms, software developers, cybersecurity companies, firms that adopt AI in their operations, data platforms and cloud providers. The fund tracks the ROBO Global Artificial Intelligence Index and is designed to avoid heavy concentration in a handful of mega-cap names by emphasizing pure-play AI companies from multiple countries.
To qualify for the index, companies must derive a distinct portion of their business and revenue from AI activities, have a market capitalization above $200 million and a trailing three-month average daily trading volume of at least $1 million.
The index uses a proprietary THNQ score to select and weight constituents. The score measures a company’s investment in AI research and development, the revenue it generates from AI, and its leadership position within the global AI industry. Companies must reach a score of 50 or higher to be eligible; higher scores receive larger allocations.
Murphy described the fund’s construction: “You have your hardware names, you have your software names, you have your cybersecurity names, you have adopters, you have data platforms, you have the cloud. So it’s part of not trying to time who is the winner, who is the leader, who’s gonna be the laggard, because we don’t know.”
VettaFi is the index provider for the ROBO Global Artificial Intelligence Index and receives an index licensing fee. VettaFi is not the issuer, sponsor or seller of THNQ and does not carry obligations related to the ETF’s issuance, marketing or trading.
A range of AI-focused funds have attracted assets as investors seek diversified exposure to the technology’s development and adoption.
Articles by this author
