Industry Updates

Fund selectors flock to AI and semiconductor ETFs in January

Artificial intelligence continues to drive thematic ETF growth

Theo Andrew

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Investors have poured into semiconductor and artificial intelligence ETFs in January as they bank on the two themes extending their hot streak in 2024.

The Xtrackers Artificial Intelligence & Big Data UCITS ETF (XAIX) recorded $281m inflows from the turn of the year to 30 January, while the iShares MSCI Global Semiconductors UCITS ETF (SEMI) netted $236m in new assets, according to Bloomberg Intelligence data.

The two ETFs were part of the strongest performing themes last year, with SEMI and XAIX returning 63.9% and 61.1%, respectively.

Semiconductors and AI have both posted a strong start to the year, with XAIX returning 7% over January, while the Amundi MSCI Semiconductor ESG Screened UCITS ETF (SEMG) – the best performing ETF in the theme last year – has returned 10.1%.

Meanwhile, the Nasdaq 100 is 4.2% up year to date as investors continue to price in aggressive rate cuts by the Federal Reserve this year.

Last year was defined by huge performance dispersion within thematics, with the artificial intelligence boom driving many tech-focused themes.

AI bullishness has continued to whet investor appetite so far in 2024, with the iShares Nasdaq 100 UCITS ETF (CNDX) and the Invesco Nasdaq-100 UCITS ETF (EQQQ) pulling in $300m and $84m, respectively.

It comes as inflows into thematic ETFs almost halved in 2023, gathering $759m versus $1.4bn the previous year and well below the $12.2bn inflows in 2021, according to Morningstar.

Assets in European thematic ETFs now amount to $37.1bn, a 12% increase on the $33bn at the end of 2022 when market returns are considered, representing 2.1% of the market.

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