These 2 AI ETFs are poised to crush the S&P 500 over the next 10 years

These 2 AI ETFs are poised to crush the S&P 500 over the next 10 years

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Artificial intelligence, or AI, is perhaps the most transformative technology trend in our lifetimes, and it creates exciting investment opportunities. But investing in individual AI stocks isn’t for everyone, and if you’re in that group, there’s nothing wrong with investing using exchange-traded funds or AI ETFs.

There are several ETFs on the market that track various AI stock indexes. However, most of them have two main problems. First, they typically have expense ratios (fees) several times higher than what you’ll pay for the average technology index fund. Second, most of them invest heavily in large-cap AI stocks.

Image source: Getty Images.

There are certainly some good reasons to invest in these companies. But you can get great exposure to AI just by buying it Invesco QQQ ETF (NASDAQ: QQQ).

Of course, this is a Nasdaq-100 index fund, not an “AI index fund.” But you might be surprised how much AI it gives you — and at a fraction of the cost of other AI index funds. In fact, the fund’s top 10 stocks read like a who’s who of the AI ​​world:

  • Nvidia (NASDAQ: NVDA)

  • Microsoft (NASDAQ:MSFT)

  • Apple (NASDAQ: AAPL )

  • Broadcom (NASDAQ: AVGO)

  • Amazon.com (NASDAQ: AMZN )

  • Tesla (NASDAQ:TSLA)

  • Meta platforms (NASDAQ: META)

  • Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG)

  • Netflix (NASDAQ: NFLX )

  • Palantir Technologies (NASDAQ: PLTR)

These 10 stocks are so strongly valued in the Nasdaq-100 that they together account for more than 56% of the fund’s assets. Plus, with an expense ratio of 0.20% (compared to 0.6%-0.8% for most other AI ETFs), your higher returns benefit you, not the investment managers.

In short, the Invesco QQQ ETF can be a great choice if you want to primarily own a basket of large-cap AI stocks, but don’t want to be overly dependent on the performance of any single company.

As you can probably tell from the last part, I’m not a big fan of paying high fees for ETFs that simply track an index, especially when their top holdings are similar to those offered by cheaper options. But right actively managed An ETF that aims to beat a benchmark rather than just track it may be worth the extra cost.

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