The New Investment Axis: Global Finance Zeroes in on Artificial Intelligence

Key Points

• Record-Breaking Launch: Korea Investment Management launched the ACE U.S. AI Tech Core Industry Active ETF, which attracted a cumulative individual net purchase of $\text{KRW }76$ billion (approximately $\$\text{US }58.8$ million) within five days of its listing on the Korea Exchange.
• Rapid Growth: The AI ETF quickly surpassed $\text{KRW }100$ billion in Net Asset Value (NAV) in just seven trading days, signaling immense investor appetite for focused Artificial Intelligence (AI) exposure.
• Targeted Strategy: The actively managed fund invests across the entire AI value chain, segmented into four core areas: Computing Infrastructure, Energy Infrastructure, AI Hardware, and AI Software.
• Structural Shift: The fund’s launch confirms that AI is viewed by major financial institutions not merely as a trend, but as a fundamental, structural renewal of all global industries, shifting the investment question from if to how to invest.

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The technological landscape is experiencing a paradigm shift powered by Artificial Intelligence (AI). What began as a nascent field of academic research has rapidly evolved into the core engine driving global economic and industrial restructuring. From personalized medicine to automated manufacturing and next-generation data centers, AI is no longer a futuristic concept but a present-day reality deeply embedded in the fabric of modern life.

In response to this seismic change, the financial world is recalibrating its investment strategies. Traditional broad-based tech funds are giving way to more specialized, active vehicles designed to capture the dynamic and rapidly shifting leadership within the AI value chain. A standout example of this is the recent launch of the ACE U.S. AI Tech Core Industry Active Exchange-Traded Fund (ETF) by Korea Investment Management, an event that has sent ripples of investor excitement throughout the South Korean and broader Asian markets.

The Phenomenal Demand for the AI ETF

The launch of the AI ETF was met with extraordinary investor demand, underscoring the seriousness with which individuals and institutions view the long-term prospects of AI. According to the Korea Exchange, the fund posted $\text{KRW }28$ billion in individual net purchases on its establishment day. This initial enthusiasm was not a fluke; within just five days of listing, the cumulative individual net purchases soared past $\text{KRW }76$ billion.

The subsequent performance was equally impressive. Within a mere seven trading days, the Net Asset Value (NAV) of the AI ETF surpassed the $\text{KRW }100$ billion mark, making it one of the fastest-growing products in the ACE ETF lineup. This rapid accumulation of assets speaks volumes about the market’s conviction: investors are actively seeking specialized, focused exposure to the U.S. technology sector’s AI core.

AI: Beyond the Hype, Into Structural Renewal

For many, the initial boom in AI felt like a “theme” or a “fad” driven purely by speculation. However, financial experts now concur that the ongoing evolution of AI technology represents a structural renewal across all industries, akin to the internet’s birth or the personal computer revolution. This profound shift changes the fundamental approach to investment.

A source from Korea Investment Management articulated this sentiment clearly: “The evolution of AI technology is not merely a trend but a structural renewal across industries, already deeply permeating every aspect of daily life. Investing in the AI industry is no longer a question of ‘whether to invest’ but has shifted to ‘what and how to invest.'”

The ‘What and How’ of AI Investing

The complex nature of the AI industry, which sees leadership shift rapidly between different segments—from hardware to software to infrastructure—makes passive investing challenging. The innovative approach of this specific AI ETF lies in its active management strategy, designed to overcome the difficulties individual investors face in tracking this fast-moving ecosystem.

The fund’s core strategy divides the AI industry into four key sectors, allowing it to capture the entire value chain and flexibly allocate capital as different segments take the lead:

1. Computing Infrastructure: Focusing on the foundational elements like high-performance semiconductors and cloud computing giants that provide the raw processing power for AI models.
2. Energy Infrastructure: Investing in companies related to power generation facilities and advanced cooling systems, which are increasingly crucial given the massive energy demands of AI data centers.
3. AI Hardware: Targeting the physical components and devices that enable AI at the edge, including specialized chips and robotic technologies.
4. AI Software: Concentrating on the application layer, including companies developing large language models, AI services, and critical enterprise software.

Currently, the fund’s strategy reflects the application stage of AI development, with AI Software holding the largest allocation at approximately $45\%$. This is followed by Computing Infrastructure and Energy Infrastructure, each at about $20\%$, and AI Hardware at $15\%$.

Active Strategy: Capitalizing on the Shifting AI Landscape

The ACE U.S. AI Tech Core Industry Active ETF is an actively managed product, a key differentiator in a market often dominated by passively indexed funds. This active approach is strategically vital for a disruptive and rapidly evolving sector like AI.

Flexibility and Discretionary Changes

Unlike passive ETFs that are tied to a fixed index, an active AI ETF can quickly reflect changes in market trends. Its managers can make discretionary changes to the portfolio in response to new technological breakthroughs or shifts in industry leadership. For instance, if a new generation of custom AI chips (ASICs) gains traction, the active manager can swiftly increase exposure to those AI Hardware companies without waiting for a scheduled index rebalancing.

The selection of constituent stocks is based on a meticulous evaluation process, considering factors such as:

• Market Share and Market Capitalization: Ensuring investment in current industry leaders.
• Partnerships with Big Tech Companies: Identifying firms deeply integrated into the AI ecosystem of major players.
• Patented Technologies: Targeting companies with proprietary innovations that give them a competitive edge.

The current top holdings, which include companies like Oracle, Reddit, Meta, Oklo, AppLovin, Robinhood, and Bloom Energy, demonstrate a blend of established technology firms and next-generation leaders across various AI-enabled fields. This comprehensive and flexible approach is what makes this AI ETF a compelling single-solution investment for the entire AI value chain.

The Global Context: South Korea’s AI Investment Drive

The launch of the AI ETF in South Korea is not an isolated event but rather a reflection of a broader, heated trend in the domestic market. The total net assets of AI-themed ETFs listed in Korea have recently exceeded $\text{KRW }11$ trillion (over $\$\text{US }8$ billion), showcasing a rapid surge in investor interest.

This growth is fueled by high performance and diversification. Over the past year, the average return on AI-themed ETFs has been significant, with the market expanding its focus beyond just semiconductors to include power infrastructure, software, and data centers. South Korea’s investment landscape is actively pivoting toward megatrends like AI, big tech, and semiconductors, recognizing them as long-term, fundamental industrial changes. The success of the ACE AI ETF confirms that investors are eager for products that allow them to stand at the center of this innovation.

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Conclusion: Securing a Stake in the AI Revolution

The overwhelming demand for the ACE U.S. AI Tech Core Industry Active AI ETF is a clear indicator that the smart money is moving decisively into the Artificial Intelligence sector. The days of treating AI as an optional technology theme are over; it is now the essential infrastructure of global industry.

By offering a single, actively managed product that captures the entire AI value chain—from the chips and power infrastructure to the software applications—Korea Investment Management has provided a strategic option for investors to participate in this structural renewal. The rapid growth of this AI ETF is a testament to the powerful convergence of investor conviction and a strategically positioned financial product ready to capitalize on the next era of technological growth.