Themes Launch Pushes Fee War in AI ETFs

Wealth Management Editor

Apr 30, 2024

Reviewed by: etf.com Staff

Edited by: James Rubin

Themes ETFs continued its sprint into the ETF market with its Robotics & Automation ETF (BOTT), which debuted last week as the New York-based issuer’s 12th fund since entering the space in December.

BOTT is a passive thematic fund that tracks the Solactive Industrial Robotics and Automation Index and is aiming to compete on price with an expense ratio of 35 basis points, or about 40% below the category average of 64 basis points.

“All else equal, funds with higher fees pose a greater drag on portfolio performance,” said Taylor Krystkowiak, Themes vice president and investment strategist.

ETFs have historically stood out by being unique, cheap or both. But with less than a year under its belt and with total assets across its funds hovering around just $30 million, Themes will have to hustle to compete with the likes of the $2.6 billion Global X Robotics and Artificial Intelligence ETF (BOTZ) and the $1.7 billion Global X Artificial Intelligence & Technology ETF (AIQ).

But those two Global X ETFs, representing the largest AI funds, each charge 68 basis points. In fact, the eight largest AI ETFs, down to the $270 million Invesco AI and Next Gen Software ETF (IGPT), all charge more than BOTT.

Themes ETFs Dives Into AI

The Themes lineup now includes eight thematic ETFs and four fundamental strategies, including exposure to artificial intelligence, cloud computing, cybersecurity, airlines, banks, gold miners and European luxury.

Recognizing the stiff competition in the ETF business, Krystkowiak said BOTT stands out for its lower fee and only investing in companies that have generated profits over the past 12 months.

“We are avoiding those companies that are trying to tap into the debt markets,” he said.

Krystkowiak doesn’t believe Themes is too small or too late to launch an ETF in the AI space because all the trends point toward rapidly increasing growth AI technologies.

He cites a report from the World Economic Forum predicting tasks performed by robots to jump from 34% today to 43% by 2027. And another report by the International Federation of Robotics forecasts a 21% increase in the use of robotics over the next decade.

“The space continues to post impressive growth rates,” Krystkowiak added. “Long term, this will continue to be a play.”

Jeff Benjamin

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Jeff Benjamin is the wealth management editor at etf.com, responsible for coverage related to the financial planning industry. This includes writing, hosting podcasts, webinars, video interviews and presenting at in-person events.

Jeff is a veteran journalist with more than 30 years’ experience covering the financial markets. He has won more than two dozen national and regional awards for his reporting. He most recently worked as a senior columnist at InvestmentNews where he wrote about investment products and strategies, as well as the broader financial planning industry. Prior to that, Jeff worked as an analyst at Cerulli Associates where he researched and wrote reports on the alternative investments industry. Jeff also worked as a money management reporter at Dow Jones Newswires, where he covered the mutual fund industry.

Based in North Carolina, Jeff is a former Marine and has a bachelor’s degree in journalism from Central Michigan University.

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