Smart Investing: Strategies for Playing the AI Boom with WisdomTree Artificial Intelligence & Innovation Fund (WTAI) Amidst Market Correction
Investors who are looking to capitalize on the artificial intelligence (AI) boom may find the WisdomTree Artificial Intelligence and Innovation Fund (WTAI) to be a promising option. Despite the recent market correction and the decline in semiconductor chip stocks, the momentum for AI stocks remains strong. The WTAI fund offers exposure to companies involved in AI technologies and the development of AI innovations.
One of the reasons for the recent correction in the AI sector can be attributed to the pullback experienced by Apple (AAPL) after reaching an all-time high. The announcement of their AI chatbot development led to a peak in the stock’s value, but since then, it has retreated by 10%. This AI pullback has affected other big names in the market as well.
However, there is optimism regarding the future of AI, with expectations of a profit boom from productivity enhancements. The latest BofA Global Fund Manager Survey reveals growing optimism about how AI will impact bottom-line numbers. This sentiment is echoed by the increasing focus on AI within the C-suite of large and small companies.
When it comes to AI-focused ETFs, BofA ranks the Global X Artificial Intelligence & Technology ETF (AIQ) as the top fund. However, the WTAI fund also deserves attention due to its low cost and decent tradeability. With an expense ratio below that of its peers and a diversified exposure to companies involved in AI, WTAI can complement a growth allocation in investors’ portfolios.
What sets the WTAI fund apart is its construction as a modified equal-weight fund. This means that no single position in the fund holds more than 2.54% of the portfolio, avoiding an over-concentration in a particular holding like Nvidia (NVDA), which is often seen in other AI ETFs. The fund also offers industry diversification, with representation from AI software, semiconductors, innovation, and other hardware sectors.
Although the recent chart of WTAI shows some concerning signs, there may still be an opportunity for bulls. The fund is currently at a key support level, but a breakdown below the $18 mark could lead to further correction. It is worth noting that there has been a negative RSI momentum divergence, which contributed to the recent decline. However, the long-term 200-day moving average is still rising, indicating that the bulls are in control.
Considering all these factors, it may be wise for investors to approach WTAI tactically. While the fund’s price hovers around crucial support, buying on a dip near $16 could potentially yield long-term gains. It is important to keep in mind that investing in any fund carries its own risks, and market conditions can change rapidly.
In conclusion, for investors seeking exposure to the AI boom, the WisdomTree Artificial Intelligence and Innovation Fund (WTAI) presents a compelling option. With its low cost, diversified exposure, and modified equal-weight construction, WTAI offers a strategic approach to capitalize on the potential of AI. However, it is important for investors to stay vigilant and act tactically to navigate the current market conditions.
