[Practical Finance] Interest in ETFs Holding Companies Benefiting from ChatGPT

Microsoft, Google Lead Technology Development
"Investing in Semiconductor and Tech Stocks as Part of Portfolio"

[Asia Economy Reporter Kwangho Lee] “Please tell me about exchange-traded funds (ETFs) that invest in companies related to ChatGPT.” (Reporter)

“OpenAI is still a private company and not publicly listed, so there are currently no ETFs directly related to OpenAI. However, ETFs related to companies in artificial intelligence include the following: AI and Robotics ETF: BOTZ, Artificial Intelligence ETF: IRBO, Global X Robotics & Artificial Intelligence ETF: BOTZ, AI-Powered Equity ETF: AIEQ.” (ChatGPT)

ChatGPT recommended BOTZ, IRBO, and AIEQ. All are U.S.-based products related to artificial intelligence (AI) and robotics. It explained that such ETFs include shares of companies directly or indirectly related to the AI sector in the stock market. It also added that investors should carefully review the performance and risk factors of these ETFs before making investment decisions.

Amid the strong craze for the conversational AI chatbot ‘ChatGPT,’ interest in beneficiary industries is heating up. In particular, ETFs with a high proportion of companies supplying key components related to AI, the core technology of ChatGPT, are attracting attention. We examined ChatGPT-related ETFs from major domestic asset management companies.

Representative U.S. companies related to ChatGPT include Microsoft, Google (Alphabet), Nvidia, Amazon, and Meta Platforms. Domestic ETFs inevitably include U.S. portfolios. Samsung Asset Management’s ‘KODEX U.S. FANG Plus (H) ETF’ is a representative ETF investing in such U.S. tech stocks. It invests equally 10% each in 10 companies, including the five major ChatGPT-related companies plus Tesla, Netflix, Apple, AMD, and Snowflake.

Kim Dohyung, head of ETF consulting at Samsung Asset Management, explained, “KODEX U.S. FANG Plus (H) invests equally in 10 leading U.S. information and communication (IT) innovation companies, offering the advantage of investing in new technologies that will continuously change the world, not only ChatGPT.”

OpenAI, the developer of ChatGPT, received investment from Microsoft. Microsoft signed a partnership granting exclusive license use. Meanwhile, competitors are accelerating AI development. Recently, Google announced ‘Bard,’ demonstrating its commitment to AI technology. In Korea, AI competition is intensifying among IT giants such as Naver and SK Telecom.

Mirae Asset Global Investments’ ‘TIGER U.S. Tech TOP10 ETF’ aligns with this trend. It invests 20% in Microsoft and 18% in Alphabet. It is a fund investing in major U.S. big tech companies. The portfolio is structured to enable investment in the fiercely competitive AI industry, mainly among large companies.

Mirae Asset Global Investments is also considering listing a ChatGPT-themed ETF separately from the ‘TIGER U.S. Tech TOP10 ETF.’ They are carefully reviewing it considering the growth potential of the AI market. A Mirae Asset Global Investments official said, “The AI market is expected to grow steadily,” adding, “Not only will AI technology improve, but various services and businesses based on AI technology are expected to develop.” He continued, “Growth potential is likely to be high, centered on large companies with capital strength. However, due to expectations of new technology development, volatility is expected to remain high for the time being.”

KB Asset Management’s ChatGPT-related ETFs can be summarized as semiconductors, platforms, and data. First, the ‘KBSTAR Non-Memory Semiconductor Active ETF’ is characterized by a high proportion of small and mid-cap stocks. Among the 22 constituent stocks, 18 are listed on KOSDAQ. It is expected that as AI model usage increases, the semiconductor market turnaround could accelerate.

The ‘KBSTAR Fn Platform Theme ETF’ invests mainly in domestic platform companies. As AI technology advances and utilization increases, long-term profit generation is expected. The ‘KBSTAR Global Data Center REIT Nasdaq (Synthetic) ETF’ is expected to benefit from increased data traffic due to AI usage. As the AI market activates, data centers inevitably become busier.

Lee Sujin, head of ETF marketing at KB Asset Management, said, “While the benefits are expected to spread across technology stocks, short-term noise is inevitable considering the harmfulness or misuse potential of content.” She added, “Since growth stocks are expected to be highly sensitive to interest rates, it is advisable to invest as part of a portfolio in semiconductors or technology stocks overall rather than aggressively.”

Hanwha Asset Management offers the ‘ARIRANG Global Artificial Intelligence Industry MV ETF,’ which allows diversified investment across the global AI industry. Another popular product is the ‘ARIRANG Global DRAM Semiconductor iSelect ETF,’ which invests in key DRAM-related companies expecting benefits. Kim Seonghoon, head of the ETF business division at Hanwha Asset Management, emphasized, “AI is a core technology of the Fourth Industrial Revolution and is expected to be a ‘mega-trend’ industry with long-term growth potential,” adding, “High-performance semiconductors are essential to process large volumes of data at once for AI industry growth.”