A new actively managed AI ETF
With President Trump’s inauguration announcing the enormous new Stargate AI project of up to USD 500 billion over the next four years, the time seems opportune for an active AI ETF launch.
iShares AI Innovation Active UCITS ETF (IART) is actively managed by Tony Kim and Reid Menge, who manage Fundamental Equities for BlackRock, which owns iShares. Kim joined Blackrock in 2013 and Menge in 2014 so there is over a decade of data to assess their track records. From inception to the end of December 2024, their fund made 1010% against 978% for its benchmark, MSCI AW Technology 10/40. Their biggest year of outperformance was 2020 while their largest years of underperformance came in 2021 and 2022.
Six of IART’s top ten holdings are mega caps – Nvidia, Meta, Microsoft, Broadcom, Amazon and Tesla – and do overlap with the largest in the S&P 500 or Nasdaq 100 indices, but another three - Astera Labs, Reddit, and Cadence Design -are mid caps by US standards.
The portfolio is mainly US firms but does include Taiwan’s Taiwan Semiconductor, ARM Holdings of the UK, Japan’s Hitachi and China’s Pony AI.
The expense ratio of 0.73% is close to that on another active tech ETF iShares Technology Opportunities Active ETF (TEK) also run by Kim and Menge, which we wrote about here: Playing AI: Active or Passive?
These are relatively high costs for an active ETF but are pretty close to a typical active mutual fund fee in Europe.
IART integrates ESG and reporting under SFDR category 8 will be appreciated by some allocators and investors in Europe. The product is already registered in 14 European countries - and also in Saudi Arabia, a growing financial market. iShares offers several Saudi equity ETFs and the Saudi regulators may be returning the compliment by giving their own investors access to a growing variety of ETFs.