In an attempt to tap the hottest trend with some innovation, legendary investor Jim Rogers launched Rogers AI Global Macro ETF BIKR that leverages the capabilities of artificial intelligence (AI). The fund is powered by a symbiotic relationship fostered by the multi-decade expertise of Jim Rogers and financial professionals.
BIKR in Focus
This new ETF seeks to provide investors with an optimally weighted global portfolio. It aims to outperform global, published equity indexes by tracking the Rogers AI Global Macro Index, which is developed by Ocean Capital Advisor.
The underlying index targets single-country ETFs with the broadest exposure available. Its portfolio is determined by an AI-driven algorithm that analyzes macroeconomic data, such as volatility, interest rates, productivity and gross national product, on a monthly basis to identify changing market conditions in individual countries and across the global economy. The model seeks to calculate and incorporate both longer-term trends (up to 18 months) and short-term cycles to make investment allocations mainly in single-country ETFs.
Based on this approach, BIKR currently holds 40 single-country ETFs with the largest country allocation to Brazil (6.4%), South Korea (3.9%) and Hong Kong (3.8%). It allocates 24.7% to the short-term Treasury ETF, which is added on a time-to-time basis required to reduce or eliminate exposure to a particular country (read: Should These 3 Emerging Country ETFs Fear Fed Rate Hikes?).
The fund comes with a high expense ratio of 0.75% compared with many other smart beta or niche ETFs in the space.
How does it fit in today’s portfolio?
The ETF could be an intriguing choice for investors seeking to gain exposure to the rapidly evolving AI market.
AI is the simulation of human intelligence processes by machines, especially computer systems. Its popularity has been growing by leaps and bounds buoyed by massive demand for analyzing unstructured data like tweets, social media posts, photos and videos. As such, AI is touted as the next big emerging technology and companies are racing to invest in it (read: Here's Why You Should Invest in Robotics & AI ETFs).
According to ResearchAndMarkets.com, the AI market is expected to witness a CAGR of 36.62% $190.61 billion by 2025 from $21.46 billion in 2018. Growing big data, increasing adoption of cloud-based applications and services, and increasing demand for intelligent virtual assistants are the biggest catalysts. Gartner projects the global AI-derived business value to reach $1.2 trillion in 2018, up 70% from 2017, and $3.9 trillion in 2022.
Given the solid future growth in this niche corner of the market, investors should bet on this first passive AI ETF named after Jim Rogers.
Competition
There is an appetite for this fund despite a few choices already available in the space. AI Powered Equity ETF AIEQ is the first dedicated AI ETF, launched in October 2017, that utilizes the cognitive and big data processing abilities of IBM (NYSE:IBM) Watson to analyze U.S.-listed investment opportunities. It has AUM of $148.5 million and an expense ratio of 0.75% (read: Here's an AI Powered ETF That Uses IBM's Watson & Google (NASDAQ:GOOGL) Deep Mind).
The two ETFs — Global X Robotics & Artificial Intelligence ETF BOTZ and ROBO Global Robotics & Automation Index ETF (TA:ROBO) — offer exposure to AI with a mix of robotics technology. BOTZ has amassed $2.4 billion in its asset base and has an expense ratio 0.68% while ROBO has AUM of $2.2 billion and an expense ratio of 0.95%.
Global X Future Analytics Tech ETF (AX:AIQ) could also pose a threat to the new ETF. It delivers access to dozens of companies with exposure to the artificial intelligence and big data theme. The fund has accumulated $54.7 million in its asset base and charges 68 bps in annual fees.
Bottom Line
Given that BIKR invests in the hottest emerging technology trends with a macro and global focus, it could enjoy the first-mover advantage. Hence, it will not be much difficult for the product to see big inflows and solid investor interest.
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ROBO GR&AI (ROBO): ETF Research Reports
AI-PWRD EQ (AIEQ): ETF Research Reports
GLBL-X ROB&ART (BOTZ): ETF Research Reports
GLBL-X FUT AN T (AIQ): ETF Research Reports
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Zacks Investment Research