In a speculative corner of the ETF world, artificial intelligence is fast becoming yesterday’s trade. Instead, the next disruptive bet on humanity’s fate is moving into the realm of science fiction: Humanoid robots, UFOs and quantum computing.
To a niche band of opportunistic fund managers, these aren’t far-flung fantasies — they’re frontier investments for risk-loving tech maximalists and beyond.
Robots that help cook and clean. Quantum computers powerful enough to crack modern encryption. Secretive defense contractors building out technologies inspired by extraterrestrial life forms. Over the past few months, issuers including Roundhill Investments, KraneShares and Themes have designed products aiming to capture these out-of-this-world ideas — betting investors will buy the story before the science well and truly arrives.
It’s the kind of thematic-investing pitch popularized by Cathie Wood’s ARK Investment Management — which also touts the humanoid sector — in the pandemic: Bold claims, long timelines, uncertain payoffs. Only this time round, there are even fewer corporate-earning stories, industry benchmarks or valuation models to anchor the trade. Yet with the AI story now firmly embedded into mainstream portfolios, issuers are looking for first-mover advantages to market the next novel tech story.
“ETF issuers are always looking for the next frontier. Themes evolve quickly, AI was a hit, but the space is now crowded with products. The race is on to discover the next big idea,” said Athanasios Psarofagis, ETF analyst at Bloomberg Intelligence. “Some may sound far-fetched today, but we’ve said that before about themes that are now hits. What seems niche now could be a success tomorrow.”
Dave Mazza, the CEO of Roundhill, is behind that actively managed fund, which is set to launch on Thursday under the ticker HUMN with a focus solely on the companies designing and building humanoids. He sees the theme playing out as early as the next six months, as advances in AI and robotics converge. Elon Musk, for one, expects thousands of Optimus bots in Tesla Inc. factories by year-end.
“Humanoids aren’t flying cars or quantum computing. In China, these robots are already in market and will be coming to market in the U.S. in the near future,” said Mazza. “This ETF offers investors dedicated access to a theme that’s playing out today, not tomorrow.”
Derek Yan, senior KraneShares investment strategist, says household-name companies like Tesla and Nvidia Corp. are already in the mix, and are planning to deploy billions of dollars into humanoid tech for use in hospitals, factories, elder care and more. Newer, often international players, like South Korea-based Rainbow Robotics and Japan-based Nidec Corp., as well as private entrants like China–based Unitree, are also joining the race.
KOID tracks a rules-based index. Yan’s team started its stock-picking search for the fund by sifting through a wider universe to filter down to companies in three main areas of interest: the “brain”; the “body,” which includes humanoid component suppliers; and the “integrators,” or companies commercializing full humanoid robotics. The fund’s largest holdings include Jabil Inc., Lynas Rare Earths Ltd., Amphenol Corp. and Melexis NV, though Nvidia and Tesla also round out the list.
“As Physical AI models continue to break through, we’re approaching a ‘GPT moment’ for humanoids,” said Yan. “It’s the next big thing after generative AI.”
Space Age
Quantum computing is a functioning — albeit nascent — sector, with a Defiance product, QTUM, already pulling in more than $600 million in flows this year amid an 11% rally. But other strategies are anchored in pure conjecture. Matt Tuttle, for one, is angling to bring UFOD — a UFO-themed ETF powered by AI — to market, built on speculation that alien tech may be hiding in defense-contractor R&D labs.
For ETF issuers, filing early isn’t just a product decision; it’s a first-mover narrative play. Some retail traders are responding. Thematic-ETF flows and assets under management have been picking up in recent weeks as investors look for exposure to new ideas and as portfolio diversifiers, according to Todd Sohn at Strategas.
Critics argue that some of these investment areas are yet undeveloped and might not catch on with investors. Even many AI funds, of which there are more than 40, according to Bloomberg data, are having a difficult time attracting cash.
“At the end of the day, it strikes me as a very, very narrow niche to try to capitalize on,” Dave Nadig, an ETF industry veteran, said of the humanoid sector.
But for early adopters of imagined realities, that’s beside the point for now. In a saturated market, they offer something scarcer than market returns or fundamentals: a story to believe in.
Issuers, moving at rapid-fire pace to ride newfangled ideas, have another incentive: standing out from the crowd. The $11 trillion ETF landscape remains ever-competitive in the US, now flooded with more than 4,200 products.
At Lazard, a $235 billion asset manager, Sarj Nahal runs a megatrends ETF that trades under the ticker THMZ. He has identified a number of investment themes for the fund, including software apps and agents, data and AI, and future health, among others. The fund, up 20% since April, holds global names like Siemens AG and EssilorLuxottica SA.
“This is very much about the issues that are going to be on the table three to five years from now,” Nahal said in an interview. “We don’t want to be investing in what’s on page one of the newspaper — what we’re trying to spot is those issues and those structural drivers or data points that are coming from the companies that we’re talking to that are currently on section C, page 32 but that are slowly moving their way to the front of the newspaper.”
Cautionary Tale
Still, the metaverse — a pandemic-era supertrend — offers a cautionary tale. It promised an immersive virtual future and drew in some of the world’s biggest brands. Facebook even changed its name to Meta Platforms Inc. to stake its claim. But the hype unraveled just as fast. In 2023, at least two ETFs based on the metaverse ended up closing. Today, the term barely registers in earnings calls or investor decks. Other themes have also fizzled: marijuana and psychedelics ETFs failed to gain traction.
“Investing in unconventional technology themes can offer early exposure to disruptive trends — ideally, this would be similar to investing in the internet or digital assets in their early stages,” said Roxanna Islam, head of sector and industry research at ETF shop TMX VettaFi. “But very few themes have that level of success and some never fully materialize.”
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