JPMorgan AI ETFs report finds top-five theme despite rough quarter
J.P. Morgan Asset Management says AI is a top-five ETF theme by assets as investors shift from mutual funds toward ETFs.
By Amanda Ross · Deals Correspondent
· 3 min read
JPMorgan AI ETFs research shows artificial intelligence has become one of the largest thematic categories in exchange-traded funds by assets under management, according to J.P. Morgan Asset Management’s latest “Guide to ETFs.” The finding came despite a volatile second quarter for AI-linked stocks, underscoring how investor demand for packaged exposure to the sector has continued through market turbulence.
Jon Maier, J.P. Morgan Asset Management’s chief ETF strategist, told CNBC’s “ETF Edge” that many investment themes are increasingly being reshaped around AI and the wider set of companies tied to its development. Maier led the insights team behind the report, which was published this month.
The firm’s guide ranked AI among the top five ETF themes by assets under management. The report did not give a specific dollar amount in the cited findings, but its ranking places AI alongside the largest areas of thematic ETF demand at a time when investors are using funds to target technology, infrastructure and related market exposures.
What are AI ETFs?
AI ETFs are exchange-traded funds that hold baskets of securities linked to artificial intelligence, rather than requiring investors to buy individual companies. Depending on the fund, that exposure can include software, semiconductor, data-center, infrastructure, energy or model-development businesses tied to the AI supply chain.
Maier said AI-themed funds increasingly overlap with infrastructure because the technology depends on more than software applications. He pointed to AI applications, power needs and AI models as parts of a broader investment story that fund issuers are combining into thematic products.
The rise of AI as an ETF theme has coincided with a broader migration of investor cash toward exchange-traded funds and away from traditional mutual funds, according to J.P. Morgan’s guide. Maier said CNBC that mutual fund inflows have weakened meaningfully, while ETF inflows have grown.
He said the data in the report showed negative overall flows into mutual funds over the past several years. In his view, that shift is likely to persist, although the report’s cited findings did not provide a specific forecast figure for future flows.
Why are investors shifting from mutual funds to ETFs?
Maier said retail investors have found ETFs more attractive in part because of tax treatment. ETFs generally use a structure that can reduce taxable capital-gain distributions compared with mutual funds, although investor outcomes depend on the fund and the investor’s own circumstances.
He contrasted that with the experience some mutual fund holders can face in down markets. Maier said an investor who bought a mutual fund in 2022 could have been down substantially on the position and still received a capital-gain distribution, using a 6% example to illustrate why that outcome can frustrate holders.
The report’s findings point to two related shifts in fund markets: stronger demand for thematic AI exposure and continued preference for the ETF wrapper. For asset managers, that creates incentives to build products that connect AI to infrastructure, power demand and model development. For investors, it adds more vehicles for concentrated exposure to a theme that remains sensitive to technology valuations and market volatility.
This story draws on original reporting from CNBC.
