Global X has unveiled the latest additions to its thematic line-up in Europe with the launch of two ETFs targeting companies involved in artificial intelligence (AI) and defence technology.
Rob Oliver, Head of Global X ETFs Europe.
The Global X Artificial Intelligence UCITS ETF (AIQU) and Global X Defence Tech UCITS ETF (ARMR) have been listed on London Stock Exchange in US dollars and pound sterling, on Xetra and Borsa Italiana in euros, and on SIX Swiss Exchange in Swiss francs.
AIQU comes with an expense ratio of 0.40%, while ARMR is priced at 0.50%.
Rob Oliver, Head of Global X ETFs Europe, commented: “We are dedicated to providing our investors with access to the most relevant and innovative investment themes. The launch of our AI and Defence Tech UCITS ETFs underscores our commitment to expanding our brand in Europe and empowering investors to capitalise on sectors that are vital to the future of our continent.
“By focusing on AI and defence technology, we are offering strong growth potential while supporting Europe’s strategic priorities for technological advancement and security.”
Artificial Intelligence
Global X emphasizes the transformative potential of AI, projecting its contribution to reach $15.7 trillion by 2030, comparable to the GDP of the entire European Union in 2023.
Moreover, generative AI alone could annually add between $2.6 trillion and $4.4 trillion to the global economy, as per McKinsey’s estimates.
AIQU strategically aims to capitalize on this growth, targeting companies poised to benefit from AI’s rapid commercialization and expansive economic impact.
The fund is linked to the Indxx Artificial Intelligence Index which targets developed market firms that are either directly developing AI technologies or providing AI-driven services (known as Category 1 constituents), as well as those manufacturing hardware crucial for AI and big data applications or developing quantum computing technologies (Category 2 constituents).
Companies must meet specific criteria to be eligible, including a minimum total market capitalization ($2 billion for Category 1 and $500 million for Category 2) and sufficient liquidity, represented by an average daily turnover of at least $2 million.
The top 60 securities from Category 1 and the top 25 securities from Category 2 are selected for the final index based on a proprietary Exposure Score that reflects that firm’s alignment with the AI theme.
Constituents are weighted by float-adjusted market capitalization, with a maximum weight cap adjusted according to the company’s Exposure Score: higher exposure firms have a cap at 3%, while those below a certain threshold are capped at 1%.
The index adheres to an annual reconstitution and a semi-annual rebalancing schedule.
Defence Tech
Global X highlights that the evolution of technology has introduced new national security challenges, prompting significant investment in emerging defence capabilities to manage new vulnerabilities, such as cyberattacks.
According to Global X’s analysis, based on data from the Stockholm International Peace Research Institute, global military and defence spending is expected to grow by about 40% to exceed $3.3 trillion by 2030, with a growing emphasis on artificial intelligence, cybersecurity, and other new-age defence technologies.
ARMR focuses on companies likely to benefit from these advanced technologies that contribute to national defence.
The ETF tracks the Mirae Asset Defence Tech Index which covers firms across developed and emerging markets, excluding China, India, Kuwait, Pakistan, Russia, and Saudi Arabia. Constituents must have market capitalizations and average daily trading values exceeding $200 million and $2 million, respectively.
The index screens for companies that derive over half of their revenue from specific sectors, such as cybersecurity, defence technology, and advanced military systems, ensuring a focused investment in pure-play defence technology entities.
The index includes the largest 50 qualifying companies, or all eligible pure-plays if fewer than 50 meet the criteria.
Constituents are weighted by float-adjusted market capitalization with a single security cap of 8% to promote diversification. Reconstitution and rebalancing occur semi-annually.