The robots are coming - investing in artificial intelligence

Artificial intelligence (also known AI) deals with getting machines to think like humans. One van distinguishes between "soft" and "hard" artificial intelligence. "Hard AI" tries to get computers to build an awareness equivalent to that of people. Conversely, "soft AI" "involves getting robots to behave like people without having a" consciousness ".

Where is AI used today?

Already today, artificial intelligence is a natural part of everyday life. For example, we find artificial intelligence in robot vacuum cleaners, self-propelled cars and chat robots on phones and computers. Many large companies invest large sums of money in developing artificial intelligence. If we want to join the AI wave, we can invest in individual shares like Alphabet (Google), Amazon, Microsoft, IBM or Facebook. A very well-known example of artificial intelligence can be the chat robots Siri or Alexa, which, by means of AI, can lead conversations and perform orders. The concept of artificial intelligence today is spent on really many things and technologies. In some cases, it really does not have much to do with artificial intelligence as such - the concept will be used rather as "buzzword". This, as an investor, be aware of if you want to invest in this Mega Trend.

Artificial intelligence; a step deeper

The investigation of artificial intelligence will both have positive and negative consequences. For example, more AI projects work to improve job safety or traffic. In addition, companies with the help of AI could increase efficiency, and save jobs by replacing employees with AI. For businesses, it is precisely an advantage, but it will also mean that many will lose their jobs. For example, several car manufacturers and tech companies are researching self-driving cars, trains, buses, etc. Anyone who previously worked as drivers stands in this way in the risk idea of losing their jobs. For example, it can be seen in Copenhagen, where the subway runs without a driver. Research is also underway into technologies that can replace employees working in customer service, production, teaching, hospitality and several other industries.

Remain exposed to artificial intelligence

First and foremost we can choose to invest in individual shares dealing with artificial intelligence. We can invest in companies that are only dealing with artificial intelligence, or companies that just work with implementing AI in their current business - eg. companies in the automotive industry or Google. Examples of companies dealing with artificial intelligence can be:

The advantage of investing in individual shares is that we can look at and choose a company we have confidence in. On the other hand, some of us prefer not to have to reflect how well a single company will manage in the future, and it may be better just investing in a fund, etc or a certificate to avoid this and at the same time achieve a greater diversification.

Follow the development of artificial intelligence field through a tracker certificate

A certificate is a security that is linked to an underlying asset – for example an equity index. Many certificates are leveraged, but not all of them. The benefits of buying a certificate are slightly the same as for funds of ETFs; one easily covers a larger range of underlying shares, and at the same time you do not have to select one or more individual shares themselves. If you are interested in being exposed to artificial intelligence through a certificate, Vontobel offers the following certificate:

The certificate is linked to the index "Solactive Artificial Intelligence Performance index".

You can see the development in the index here:

The index now includes 19 shares (as of May 15, 2021) selected by Solactive. You can see which shares are in the index and what their weight is.

Certificate from Vontobel

The certificate is "Open End", which means that no expiry date has been set. In addition, it is worth noting that, unlike many others, the certificate is not leveraged. The management fee of the certificate is 1.2% per annum. In addition, you pay a spread when buying the product.

You can see the certificate here,  including the documentation of final terms and base prospectus. For an overview,  you can find the key information document here.  

As an investor in a certificate you should note that you bear, amongst others, the credit risk of the issuer (the risk that the issuer of the certificate or the guarantor are not able to fulfill the obligations under the product). The product is not capital-protected.

Certificates aimed at other mega trends?

In addition to the Tracker certificate that follows the development in artificial intelligence, Vontobel, an investment manager with Swiss roots, has other Tracker certificates aimed at megatrends, for example: Cyber Security and Hydrogen. You can read more about an investment in Cyber Security in our article on the subject here.