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AI, tech plays for 2023’s second half

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Second-half scenarios: ETFs to choose your own adventure

Investors may want to stick with what’s working in the market.

ETF experts Todd Sohn and VettaFi’s Dave Nadig believe a second winning half is in store for technology and artificial intelligence plays.

Sohn, Strategas’ ETF and technical strategist, particularly likes Roundhill Generative AI and Technology ETF (CHAT).

“What I like about [CHAT] is that it’s actively managed,” Sohn told CNBC’s “ETF Edge” this week. “This would be my preferred route if you want to get that AI exposure and see how real the demand is.”

CHAT is up more than 10% so far this year.

Sohn also recommends Global X Robotics & Artificial Intelligence ETF (BOTZ) for those interested in introducing more industrials into their portfolio. BOTZ is up more than 37% year to date.

“I like [BOTZ] if you want to get away from tech because you already have tech exposure in your portfolio. The industrials are beneficiaries too,” he said.

Nadig, VettaFi’s financial futurist, also sees benefits from AI exposure. But, he suggested the upside has limits.

“AI is going to have a long-term and significant positive effect on GDP … [But] it’s very difficult to pick public companies that are going to be the outsized beneficiaries of that,” said Nadig. “We run into this all the time when we have cool new technology … and we end up buying Google and Microsoft and Apple and Nvidia, which we all already probably own too much of.”

He predicted industrials, robotics and automation are positioned for the biggest gains.

Both Nadig and Sohn also highlighted ETFs for those who believe the market is going to broaden out to include sectors beyond technology.

Sohn recommended the Invesco S&P 500 Equal Weight ETF (RSP) and the Vanguard Extended Market Index Fund (VXF), while Nadig suggested the JPMorgan Equity Premium Income ETF (JEPI). All three are generating positive returns this year.

“Playing a little bit defensive the rest of this year as opposed to trying to chase tech is probably the way to go,” said Nadig. “[JEPI] has been a huge flow gatherer; it’s delivered for investors … Something like extended market or equal weight exposure is a great way to try to get a leg back in if you’ve missed that [tech] rally so far this year.”

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