Best AI Tech Stocks ETF and Investment Trusts
Companies / Tech Stocks Oct 19, 2021 - 03:37 PM GMTBy: Nadeem_Walayat
You all know I'm not a funds guy, I prefer to micro manage my portfolio i.e. if I want to sell ALL of my Amazon holdings then I SELL all of my Amazon holdings which is not possible with funds. However in pursuit of an ETF that closely matches my fully invested AI stocks portfolio then the iShares Expanded Tech Sector ETF that has been in existence for 10 years in which time comes close by holding all 6 of my Top 6 AI stocks in meaningful levels which has apparently delivered a return of 600% over the past 10 years and carries a relatively low expense ratio of 0.43% (management fee).
The fund is up 20% year to date which is set against the Nasdaq up 16%, S&P up 20%, so appears to deliver adequate performance, so is NOT along the lines of cathy maniac woods gambles on loss making stocks that is down about 5% year to date.
Whilst looking at the ETF's actual stock chart shows the price rising from $56 in August 2011 to $414 today, which is a gain of 639%.and 245% over the past 5 years, that's pretty good!
In terms of how closely the fund matches my AI stocks portfolio. Here are the etf's top 7 holdings. Again when fully invested the amounts are not too far off my own breakdown.
| MICROSOFT CORP | 9.4% |
| APPLE INC | 9.3% |
| AMAZON COM INC | 7.58% |
| FACEBOOK CLASS A INC | 5.95% |
| ALPHABET INC CLASS A | 4.52% |
| ALPHABET INC CLASS C | 4.31% |
| NVIDIA CORP | 3.58% |
So about 40% of the fund matches my top 6 AI stocks! And continues with Intel at 1.4% but drops off with AMD at 0.88%, and IBM at 0.86%. But then adds a further 300 stocks including tiny holdings of WDC and CRSR.
So this fund does come close to my portfolio of stocks, as for whether I would invest in it, unfortunately it cannot be bought within an ISA or SIPP or even an ordinary dealing account in the UK! When trying to make a trade I get a pop up stating "We are unable to trade this security as there is no KID/KIID document available." So I-shares need to get their admin workers to do their jobs and comply with UK requirements by compiling the KID/KIID docs! I've sent ishares a message asking them to do so, so who knows maybe they will listen?
I popped a trade query for SLV ETF and that too comes up as cannot buy, though I can sell what I already hold. Another reason to avoid funds. I would have been tempted to have limited exposure to the Ishares Tech ETF , say upto 5% of portfolio keeping in mind they do charge 0.43% per annum. But does represent a cost effective way of picking up exposure to the basket of the Top 8 AI stocks (including Intel and IBM), but lacks exposure to chinese stocks and others such as TSMC.
Ones does all that hard work to find a good ETF that one would invest in only for the waste of space at the FCA to block one from investing, only allowed to invest in the garbage funds that they authorise (for kickbacks). Looking back at the news the new rules came in force January 2018 and any hiccups were supposed to be temporary but here we stand over 3 1/2 years on!
Anyway this ETF so far is one of the closest matches to my AI stocks portfolio.
Best UK Tech Stocks Investment Trust?
During March 2020 looking for a quick fix to buy more after gorging myself on tech stocks I turned to trusty old PCT for quick UK exposure as a one stop shop for broad exposure to the top 5 out of 6 of my top AI stocks, though it's performance is lacking up only 6.7% year to date and 17% over the past 12 months most of which is NOT down to sterling's strength that and it's hefty 1% management fee continues to make it a sort of shorter term Investment hence why I sold out towards it's recent highs.
Now with the advantage of time to ponder the pros and cons here is probably one of the best AI Investment Trusts, with the focus being on trusts rather than funds for the obvious reason they trade as stocks so not subject to fund manager shenanigans in terms of preventing redemptions.
Scottish Mortgage Investment Trust - LSE:SMT
Primary focus is on performance and in those terms this UK listed fund has done well! Up 11.15% year to date, and up 44.9% on the past 12 months! So definitely a better performer than PCT! And of course it can be held with in an ISA and SIPP and other UK tax free wrappers.
As for its top 10 holdings, we'll it more reflects my high risk stocks portfolio than my AI stocks portfolio.
| Fund % | ||
|---|---|---|
| 1 | Moderna | 8.5% |
| 2 | Illumina | 6.6% |
| 3 | ASML | 5.6% |
| 4 | Tencent | 4.2% |
| 5 | Tesla Inc | 4.1% |
| 6 | NIO | 3.5% |
| 7 | Alibaba | 3.3% |
| 8 | Delivery Hero | 3.0% |
| 9 | Kering | 2.7% |
| 10 | Amazon.com | 2.6% |
| Total | 44.3% |
In terms of AI portfolio it holds -
| Fund % | ||
|---|---|---|
| 10 | Amazon.com | 2.6% |
| 13 | Nvidia | 2.1% |
And that's it! So not AI but more bio tech with a mix of software that apparently performs well and carries a relatively low annual charge of 0.34%. Would I invest in SMT ? Yes, and given it's relative performance I would be more likely invest in SMT than PCT at its buying level.
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Nadeem Walayat has over 35 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
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