Artificial intelligence (AI) is transforming industries, from healthcare to finance, creating unprecedented investment opportunities. As a financial analyst, I’ve researched hundreds of funds to identify the best mutual funds for AI exposure—combining strong management, technological focus, and long-term growth potential.
Table of Contents
Why Invest in AI Through Mutual Funds?
AI stocks can be volatile, but mutual funds offer instant diversification across leading tech companies, startups, and supporting industries. Here’s why AI-focused mutual funds make sense:
- Reduced Single-Stock Risk – Avoid overexposure to companies like NVIDIA or Microsoft.
- Professional Management – Fund managers identify emerging AI trends before retail investors.
- Balanced Growth – Many funds blend AI leaders with stable blue-chip tech stocks.
AI Market Growth Projections
| Year | Global AI Market Size (Est.) | CAGR |
|---|---|---|
| 2024 | $500 billion | — |
| 2030 | $1.8 trillion | 22.5% |
Source: Grand View Research (2024)
The 7 Best AI Mutual Funds for 2024
1. Fidelity Select Semiconductors Portfolio (FSELX)
Key Stats:
- Expense Ratio: 0.64%
- 10-Year Return: 24.1%
- Top Holdings: NVIDIA (NVDA), ASML (ASML), Broadcom (AVGO)
Why It’s a Top AI Pick:
Semiconductors power AI infrastructure. FSELX holds NVIDIA, the leader in AI GPUs, alongside chipmakers critical for machine learning.
Performance vs. S&P 500 (5-Year):
| Fund | Avg. Annual Return |
|---|---|
| FSELX | 28.3% |
| S&P 500 | 14.2% |
2. T. Rowe Price Global Technology Fund (PRGTX)
Key Stats:
- Expense Ratio: 0.81%
- 10-Year Return: 18.7%
- Top Holdings: Microsoft (MSFT), Alphabet (GOOGL), Salesforce (CRM)
Why It’s a Top AI Pick:
This fund invests in cloud computing, automation, and AI software—key growth areas. Microsoft’s Azure AI and Google’s DeepMind are major holdings.
AI Exposure Breakdown:
- Cloud AI: 40%
- Semiconductor: 25%
- Robotics: 15%
3. Vanguard Information Technology ETF (VGT)
Key Stats:
- Expense Ratio: 0.10%
- 10-Year Return: 19.4%
- Top Holdings: Apple (AAPL), NVIDIA (NVDA), Mastercard (MA)
Why It’s a Top AI Pick:
While an ETF, VGT is a low-cost way to access AI leaders. It holds 20% in semiconductor stocks, plus fintech firms using AI.
Sector Allocation:
- Tech Hardware: 45%
- Software: 30%
- IT Services: 25%
4. Baron Partners Fund (BPTRX)
Key Stats:
- Expense Ratio: 1.30%
- 5-Year Return: 21.9%
- Top Holdings: Tesla (TSLA), SpaceX (Private), Arch Capital (ACGL)
Why It’s a Top AI Pick:
BPTRX bets on disruptive tech, including Tesla’s AI-driven autonomous vehicles and SpaceX’s satellite AI.
Risk Note: High expense ratio, but strong active management.
5. Global X Robotics & AI ETF (BOTZ)
Key Stats:
- Expense Ratio: 0.68%
- 5-Year Return: 12.1%
- Top Holdings: Intuitive Surgical (ISRG), ABB Ltd (ABB), Keyence (KYCCF)
Why It’s a Top AI Pick:
BOTZ focuses on industrial AI and robotics—factories, healthcare bots, and automation.
6. ARK Innovation ETF (ARKK)
Key Stats:
- Expense Ratio: 0.75%
- 5-Year Return: 6.4% (volatile)
- Top Holdings: CRISPR (CRSP), Zoom (ZM), UiPath (PATH)
Why It’s a Top AI Pick:
Cathie Wood’s fund targets genomic AI and automation. High risk, but high reward potential.
7. iShares Exponential Technologies ETF (XT)
Key Stats:
- Expense Ratio: 0.47%
- 5-Year Return: 11.3%
- Top Holdings: Adobe (ADBE), ServiceNow (NOW), Splunk (SPLK)
Why It’s a Top AI Pick:
XT invests in AI, blockchain, and IoT—next-gen tech with long-term upside.
How to Build an AI Investment Portfolio
A balanced AI allocation might look like:
| Fund | Allocation | Role |
|---|---|---|
| FSELX | 30% | Semiconductor growth |
| PRGTX | 25% | Global AI leaders |
| BOTZ | 20% | Robotics/Automation |
| ARKK | 15% | Speculative innovation |
| Cash | 10% | Buffer for volatility |
Expected CAGR (10-Year Projection): 15-20%
Risks of AI Investing
- Regulation – Governments may restrict AI development.
- Valuation Bubbles – Some AI stocks trade at high P/E ratios.
- Technological Shifts – New breakthroughs could disrupt current leaders.
Final Recommendation
For most investors, FSELX + VGT offers the best balance of AI growth and stability. Aggressive investors might add ARKK or BPTRX for higher upside.
