Latest news with #MorningstarDirect
Yahoo
13-06-2025
- Business
- Yahoo
AI Fund Assets Reach $38B on Record Chinese Inflows
Global assets in artificial intelligence and big data funds surged more than sevenfold over the past five years, reaching $38.1 billion by the end of 2025's first quarter, with AI ETFs dominating the U.S. market, according to a recent Morningstar Direct report. The artificial intelligence investment theme experienced record inflows in the first quarter, driven by Chinese investors responding to the breakthrough success of domestic AI startup DeepSeek. The Chinese company's efficient AI model demonstrated how advances could improve performance while reducing dependency on high-powered computing hardware, according to the report. The surge reflects growing investor interest in AI technologies following the late-2022 launch of ChatGPT 3.5, which marked a pivotal moment in AI adoption and sparked institutional and retail investor enthusiasm for the sector, Morningstar reports. However, the investment landscape has been marked by high volatility, with AI funds experiencing both dramatic growth and sharp declines as market sentiment shifts. The growth demonstrates how ETFs have become the preferred vehicle for AI investing in the U.S., contrasting with Europe, where actively managed mutual funds dominate, according to the Morningstar report. Unlike Europe, where AI funds are typically actively managed mutual funds, AI investing in the U.S. is overwhelmingly dominated by exchange-traded funds, according to Morningstar Direct. The ETF structure appeals to investors because of its lower cost, greater transparency and enhanced trading flexibility compared with traditional actively managed vehicles. U.S.-domiciled AI and big data fund assets grew 14-fold in just two years, reaching a record $5.5 billion by the end of May 2025. Despite this surge, the U.S. still accounts for only 15% of global AI fund assets, according to the report. The largest AI fund in the U.S. is the Global X Artificial Intelligence & Technology ETF (AIQ), which benefits from first-mover status as the region's inaugural AI-focused ETF. The rise of actively managed ETFs has also contributed to growth, with assets in actively managed thematic AI ETFs reaching $415 million, representing nearly 10% of total U.S.-domiciled AI fund assets, according to Morningstar Direct. The focused style of ETFs makes them suited for targeting granular exposures within the broader AI theme. The largest funds illustrate this diversity of options, according to the report. The so-called Magnificent Seven technology stocks dominate AI ETF holdings, creating structural challenges for fund managers. NVIDIA Corp. (NVDA) appeared in almost nine out of every 10 AI funds, while all seven companies were held by more than half of AI portfolios, according to Morningstar Research. The dominance presents a dilemma for ETF designers. Including these stocks results in overlap with core equity exposures, potentially reducing the appeal of AI ETFs as tactical investments. Excluding them introduces underperformance risk relative to peers, according to the report. The concentration highlights limited geographic diversification. Nearly all frequently held AI stocks globally are U.S.-listed, underscoring American leadership in the technology sector, according to Morningstar | © Copyright 2025 All rights reserved Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-06-2025
- Business
- Yahoo
AI Fund Assets Reach $38B on Record Chinese Inflows
Global assets in artificial intelligence and big data funds surged more than sevenfold over the past five years, reaching $38.1 billion by the end of 2025's first quarter, with AI ETFs dominating the U.S. market, according to a recent Morningstar Direct report. The artificial intelligence investment theme experienced record inflows in the first quarter, driven by Chinese investors responding to the breakthrough success of domestic AI startup DeepSeek. The Chinese company's efficient AI model demonstrated how advances could improve performance while reducing dependency on high-powered computing hardware, according to the report. The surge reflects growing investor interest in AI technologies following the late-2022 launch of ChatGPT 3.5, which marked a pivotal moment in AI adoption and sparked institutional and retail investor enthusiasm for the sector, Morningstar reports. However, the investment landscape has been marked by high volatility, with AI funds experiencing both dramatic growth and sharp declines as market sentiment shifts. The growth demonstrates how ETFs have become the preferred vehicle for AI investing in the U.S., contrasting with Europe, where actively managed mutual funds dominate, according to the Morningstar report. Unlike Europe, where AI funds are typically actively managed mutual funds, AI investing in the U.S. is overwhelmingly dominated by exchange-traded funds, according to Morningstar Direct. The ETF structure appeals to investors because of its lower cost, greater transparency and enhanced trading flexibility compared with traditional actively managed vehicles. U.S.-domiciled AI and big data fund assets grew 14-fold in just two years, reaching a record $5.5 billion by the end of May 2025. Despite this surge, the U.S. still accounts for only 15% of global AI fund assets, according to the report. The largest AI fund in the U.S. is the Global X Artificial Intelligence & Technology ETF (AIQ), which benefits from first-mover status as the region's inaugural AI-focused ETF. The rise of actively managed ETFs has also contributed to growth, with assets in actively managed thematic AI ETFs reaching $415 million, representing nearly 10% of total U.S.-domiciled AI fund assets, according to Morningstar Direct. The focused style of ETFs makes them suited for targeting granular exposures within the broader AI theme. The largest funds illustrate this diversity of options, according to the report. The so-called Magnificent Seven technology stocks dominate AI ETF holdings, creating structural challenges for fund managers. NVIDIA Corp. (NVDA) appeared in almost nine out of every 10 AI funds, while all seven companies were held by more than half of AI portfolios, according to Morningstar Research. The dominance presents a dilemma for ETF designers. Including these stocks results in overlap with core equity exposures, potentially reducing the appeal of AI ETFs as tactical investments. Excluding them introduces underperformance risk relative to peers, according to the report. The concentration highlights limited geographic diversification. Nearly all frequently held AI stocks globally are U.S.-listed, underscoring American leadership in the technology sector, according to Morningstar | © Copyright 2025 All rights reserved Sign in to access your portfolio
Yahoo
13-06-2025
- Business
- Yahoo
Latest ETF Flows Show the ‘TACO' Trade in Action
Recent ETF flows suggest the great U.S.-to-Europe rotation is already losing momentum, perhaps a sign of the TACO, or "Trump always chickens out," trade in action. Indeed, European ETF investors poured $3.3 billion into U.S. equities in the four weeks to June 6, surpassing European equivalents, which pulled in $2.2 billion, according to figures from Morningstar Direct. As the below chart illustrates, the U.S. exceptionalism trade peaked in late 2024 before a spectacular turnaround took hold in the early months of 2025. But recent flow momentum has swung back in favor of U.S. stocks. Rolling Three-month inflows into Europe-domiciled ETFs by region—Source: Morningstar Direct, ETF Stream The data swim against the prevailing narrative that a great rotation out of U.S. stocks is underway, with Europe one of the principal beneficiaries. Six months ago, such a turnaround was all but inconceivable. Indeed, almost all ETF issuers called for a continuation of U.S. exceptionalism in their 2025 outlooks, but the reversal has been spectacular this year as President Donald Trump's chaotic tariff announcements and profligate spending plans called economic growth into question and shined a spotlight on the deteriorating U.S. fiscal position. However, the latest positioning suggests investors are yet to call time on U.S. exceptionalism altogether, and the recent shift could be a sign of the TACO trade in action—an assumption that Trump always chickens out of his initial policy stance. "Relaxing signals in the trade dispute between China and the USA impacted the ETF market in May. Investors turned more towards the USA again," said Stefan Kuhn, head of ETF distribution Europe at Fidelity International. And looking to Europe, after a stellar run year to date, 'Investors are asking themselves how much upside potential European stocks still have,' he said. This article was originally published at sister publication ETF | © Copyright 2025 All rights reserved
CNBC
10-06-2025
- Business
- CNBC
Market volatility has marked Trump's second term — here's how investors have fared
For all the drama in the stock market of late, investors' portfolio balances may not look too different from when President Donald Trump entered office. There have been some unnerving days amid the Trump administration's tariff policies. The S&P 500 dropped by 2% or more on six days between Jan. 20 and June 6, according to data provided to CNBC by Morningstar Direct. During that period, there were 18 days where the index shed 1% or more. Still, the S&P 500's annualized return for Trump's second presidency is positive, at 1.58%, Morningstar Direct found. With more market swings on the horizon amid threats of a worsening trade war and warning signs in the labor market, the numbers serve up an old lesson for investors: When the market is freaking out, it pays to stay calm. "I always remind clients that volatility doesn't predict direction," said Cathy Curtis, the founder of Curtis Financial Planning in Oakland, California. She is a member of CNBC's Financial Advisor Council. Investors have reaped bigger returns in the early days of previous presidents. The S&P 500's annualized return was over 34% in the roughly first five months of former President Joe Biden's tenure, Morningstar Direct calculated. Meanwhile, the index was up around 30% during that same period in former president Barack Obama's first and second term. Here's a look at other stories affecting the financial advisor business. But there have been worse starts to recent presidencies than Trump's second term, as well. The S&P 500 had a negative annualized return of about 12% during former President George W. Bush's first term, up until June 6, 2001. There were also 23 days in those first months for Bush where the S&P 500 declined 1% or more. "Sharp daily declines can test resolve, but the market's resilience highlights the peril of impulsive exits during turbulence," said Douglas Boneparth, a certified financial planner and the founder of Bone Fide Wealth. He is also a member of CNBC's Financial Advisor Council. In practice, investors want to keep their money in the market over decades, and many presidencies. Almost all presidential terms since President Jimmy Carter saw healthy stock market returns for the full four or eight years, Mark Motley, portfolio manager at Foster & Motley in Cincinnati, wrote in a pre-election market update. The exception: President George W. Bush, due to the Great Recession. Foster & Motley is No. 34 on the 2024 CNBC Financial Advisor 100 list. To prove that point to clients, Curtis will show a chart of the S&P 500 going back to 1950. For example, if you invested $1,000 in the index on Jan. 20, 1950, when Harry S. Truman was president, you'd have around $3.8 million as of the market's close on June 6 of this year, Morningstar Direct found. "The short-term dips are unmistakable, but so is the overall upward trend," she said.
Yahoo
06-06-2025
- Business
- Yahoo
Bitcoin Rules for Now, but the Crypto Landscape Is Vast
Investors want more than just a bit of bitcoin. Spot Bitcoin ETFs amassed inflows of nearly $9.6 billion from April 21 through May 27, according to data compiled by Morningstar Direct. With the price of the world's most popular cryptocurrency reaching all-time highs of more than $100,000 lately and the Trump administration championing digital assets, advisors might now want to expand their focus beyond just bitcoin. 'The capitalization of the crypto space right now is more than $3 trillion. How can you ignore that?' said Campbell Harver, Duke University professor and partner at Research Affiliates. 'It'd be like ignoring a couple of companies in the Magnificent Seven.' READ ALSO: There's Almost 600K More Millionaires. That's Not Necessarily a Good Thing and Goldman, Morgan Stanley, JPMorgan Layoffs to Hit Northeast While spot Bitcoin ETFs have been seeing plenty of momentum lately, iShares Bitcoin Trust ETF (IBIT) is the real winner. Over roughly the past five weeks, IBIT has taken in $8.7 billion, per Morningstar. That's about 80% of its total inflows year-to-date. Bitcoin and ETFs that track it may be a new corner of portfolios, but advisors are quickly growing more comfortable with it. 'Most of my clients have a 5-10% allocation to Bitcoin,' said Mike Casey, founder of AE Advisors. 'Some are allocated significantly higher.' Bitcoin and IBIT are clearly the biggest players in the space, but advisors should have a wider view when considering crypto allocations, Harvey said, recommending wealth managers consider stablecoins — digital currencies pegged to traditional assets like the US dollar or gold. 'In my vision of the future, almost all assets will be tokenized — stocks, debts, mortgages, all this stuff,' he told Advisor Upside. 'We're going in that direction, and stablecoins are the first step.' But of course, stay away from meme coins. 'They have no fundamental value whatsoever,' Harvey said. 'They're like trading cards.' Golden Hour. Amidst the current economic uncertainty, some have begun viewing Bitcoin as a safe haven similar to gold, but that's still debated territory, given that their volatility profiles are drastically different, said Joy Yang, head of product management at MarketVector Indexes. 'Gold is more of a slow and steady type of asset and has been quietly outperforming US equities over the past 20 years,' she told Advisor Upside. 'Bitcoin has done it, too, but in a much more rollercoaster type of movement.' In the same five-week span, Gold ETFs have experienced almost $2.8 billion in outflows, with State Street's SPDR Gold Shares (GLD) accounting for nearly all of that, according to Morningstar. The precious metal's price per ounce is down from an all-time high of $3,500 in late April. However, gold is still outperforming Bitcoin, up 28% YTD compared with Bitcoin's 12% as of Monday. 'Bitcoin is still a teenager,' Yang said. 'It'll eventually be an adult, but it's going to take a winding path to get there.' This post first appeared on The Daily Upside. To receive financial advisor news, market insights, and practice management essentials, subscribe to our free Advisor Upside newsletter.
