Artificial intelligence-themed exchange-traded funds (AI ETFs) have become one of the most discussed investment topics among family, friends and neighbours—even those who aren’t active investors. Much of the recent excitement stems from Nvidia. The semiconductor giant surged about 171% year-to-date and reached a market capitalization near US$3.24 trillion as of June 20, 2024, briefly overtaking long-standing leaders such as Apple and Microsoft. Nvidia’s streak of strong earnings, soaring demand for its graphics processing units (GPUs) and its 10-for-1 stock split helped make its shares more accessible to retail investors. But the deeper driver remains the global expansion of artificial intelligence.
Since ChatGPT introduced generative AI to the broader public, capabilities have multiplied—image generation, photorealistic video and other creative tools have become commonplace topics of conversation. AI’s influence now stretches across semiconductors, cloud computing, big data analytics, social media, consumer electronics and more, as companies integrate machine learning and automation into products and services.
Major technology firms are racing to lead in AI. Microsoft’s multibillion-dollar involvement with OpenAI, Apple’s integration of “Apple Intelligence” across devices, and Meta’s investments in AI are all examples of big tech centring AI in their strategies. Cloud providers such as Amazon Web Services play a key role by supplying the infrastructure large-scale AI workloads require.
For Canadian investors, gaining exposure to this theme presents both opportunity and risk. Picking individual AI winners is difficult: competition, shifting technology, and an uncertain regulatory environment make predicting the dominant companies of tomorrow challenging. That’s where thematic investing—specifically AI ETFs—can be useful. This article explains how AI ETFs work, their advantages and drawbacks for Canadian investors, and the main AI ETFs currently trading in Canada.
Understanding AI and thematic ETFs
Artificial intelligence broadly describes systems and algorithms that mimic intelligent human behaviour. For investors, it helps to think about companies involved in AI in three broad categories:
- Enablers: Firms that build the core technologies and hardware that power AI, such as GPUs and specialized chips. Nvidia is a leading example in this category.
- Engagers: Companies that integrate AI directly into software products and platforms, using models and tools to enhance user experiences and workflows. Microsoft illustrates this group well.
- Enhancers: Businesses that apply AI to improve their existing products or services, increasing efficiency or functionality—medical-robotics companies are a case in point.
Thematic ETFs focus on a specific trend or industry rather than broad market indexes. An AI-themed ETF groups companies across different Global Industry Classification System (GICS) sectors—technology, communications, consumer discretionary—based on their involvement in AI, and offers investors a single ticker to gain diversified exposure to that theme.
Pros and cons of AI ETFs for Canadian investors
AI ETFs bring distinct benefits and trade-offs. Understanding these will help you decide whether they belong in your portfolio based on your goals, risk tolerance and time horizon.
Pros
- Concentrated exposure: AI ETFs provide targeted access to the AI theme without the need to research and buy many individual stocks.
- Transparency: Most ETFs disclose holdings frequently and follow clear index or rule-driven methodologies, so investors can see what they own and why.
- Tax efficiency: ETFs usually generate fewer taxable capital gains than actively managed mutual funds because of their creation/redemption mechanisms.
Cons
- Higher volatility: Thematic ETFs often concentrate in fewer sectors and can swing more dramatically than broad-market funds or balanced portfolios.
- Limited diversification: Many AI ETFs are heavily weighted to U.S. technology and tech-adjacent companies, leaving investors exposed to a narrow subset of the global market.
- Elevated fees: The specialized nature of thematic ETFs can lead to higher management fees compared with broad-market, low-cost index ETFs.
Buying AI ETFs in Canada
The Canadian market has seen a wave of AI-focused ETFs launch, especially in 2024. These range from passively managed index trackers to actively managed funds that select stocks based on proprietary research or quantitative models. Below is a summary of major Canadian AI ETFs available today and their key characteristics.
The AI ETFs trading in Canada
The table below outlines five prominent Canadian thematic AI ETFs that many investors are considering:
| ETF name | Management fee | Style |
|---|---|---|
| CI Global Artificial Intelligence ETF (CIAI) | 0.20% | Actively managed |
| Invesco Morningstar Global Next Gen AI Index ETF (INAI) | 0.35% | Passively managed (Morningstar index) |
| Evolve Artificial Intelligence Fund (ARTI) | 0.60% | Actively managed |
| Global X Artificial Intelligence & Technology Index ETF (AIGO) | 0.49% | Passively managed (Indxx index) |
| Global X Robotics & AI Index ETF (RBOT) | 0.45% | Passively managed (Indxx robotics & AI index) |
CIAI launched in May 2024 and quickly accumulated significant assets, driven by its low 0.20% management fee for an active fund and concentrated holdings that include large U.S. AI names. ARTI is another active option that uses an AI-powered portfolio tool for stock selection and weighting, but it charges a higher fee and has attracted fewer assets to date.
INAI tracks a Morningstar index that evaluates companies across sub-themes such as generative AI, data infrastructure and software. Its methodology has an element of active oversight through a research committee that scores holdings. Invesco offers both standard and Canadian-dollar-hedged share classes for investors who want to manage currency exposure.
Global X offers two different approaches: AIGO is tied to an Indxx AI and big data index and effectively wraps a U.S.-listed fund, while RBOT—listed earlier—focuses more on robotics and automation and includes applied-robotics and healthcare automation companies in its universe.
To buy any of these ETFs, enter the ticker symbol in your brokerage platform, select the number of shares and choose an order type (a limit order is often recommended to control execution price).
The future of AI ETFs in Canada
The rapid growth of AI and the proliferation of related ETFs is exciting, but it also invites comparisons to past speculative cycles, such as the dot-com boom of the late 1990s. Then, companies tied to internet infrastructure enjoyed extraordinary valuations—some survived and created lasting value, while others collapsed when the bubble popped. The AI wave may follow a different path, but the historical parallel reinforces the need for caution.
AI ETFs can be a practical way for Canadian investors to participate in the AI theme without the single-stock risk of picking individual winners. That said, it’s essential to assess each ETF’s methodology, fees, geographic and sector concentration, and how the investment fits into your broader portfolio. Conduct due diligence, understand the risks, and consider whether a thematic allocation aligns with your long-term plan before investing.
More about investing in ETFs
- Best ETFs in Canada for 2024—guides and rankings can help you compare options.
- Robo-advisor versus all-in-one ETFs—consider which approach suits new investors.
- ETF screeners and research tools—use them to match ETFs to your goals and risk tolerance.
- Market developments—follow major tech companies and semiconductor trends that influence AI ETF performance.