JPMorgan Asset Management says Wall Street relies heavily on exchange-traded funds that give investors exposure to artificial intelligence.
According to the firm’s ETF Guide, published this month, ETFs are the top five themes by assets under management, despite volatility hitting the group in the second quarter.
“A lot of (themes) are shifting towards AI and the ecosystem around it,” John Meyer, the firm’s chief ETF strategist, told CNBC’s “ETF Edge” this week.
Meyer, who led the Insights team that published the report, also highlighted the overlapping relationship between AI-themed ETFs and infrastructure.
“It all plays into the AI story: applications, energy (and) AI models,” he said.
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JPMorgan’s ETF Guide also found that while inflows to ETFs have increased, inflows to mutual funds overall have fallen significantly.
“This situation is here to stay,” Meyer said, adding that data in the report shows that flows into mutual funds overall have been negative over the past several years.
He also suggested that tax incentives make ETFs more attractive to retail investors.
“They usually don’t pay capital gains (tax),” he says.
Meyer argues that mutual funds are a different story.
“Imagine if you bought a mutual fund in 2022 and it went down 20%, 30%, 40% depending on what part of the market you bought it in. You still get a 6% capital gain. You’re not happy,” he said.
