Nasdaq CTA Artificial Intelligence Index methodology changes
20th September 2024
In light of the accelerated evolution of the AI ecosystem since November 2022, CTA, WisdomTree, and Nasdaq have decided that it was time to enhance the Nasdaq CTA Artificial Intelligence Index (NQINTEL) to reflect the changes to the AI investment opportunity:
Effective September 23, 2024, the following changes will be applied to the methodology of the Nasdaq CTA Artificial Intelligence Index, which is tracked by the WisdomTree Artificial Intelligence UCITS ETF (WTAI).
- The threshold for the market capitalisation of a security not in the index will be increased to $2 billion, as funding for early-stage AI companies is now abundant and it takes increasingly large infrastructure investment to break into the space.
- As more and more firms announce their involvement in AI, it is important for the strategy to remain focused on the companies with the most relevant involvement in the space. In order to deliver an even more focused exposure to AI, a security’s issuer which is classified as an Enhancer will need to have a CTA AI Intensity Rating of at least 0.80.
- As the Artificial Intelligence Theme evolves, the Enablers category includes a wider and wider range of companies from semiconductors to data infrastructure or databases for machine learning. The classification groups’ weights will be set to the following values: Enablers: 50%, Engagers: 40%, and Enhancers: 10%.
- Individual securities within each group will be weighted by their respective AI Intensity Score, subject to a security weight cap of 4% as the competitive landscape starts to firm up it is only logical to move from an equal weight approach to an Intensity Score approach that tilts toward the most relevant companies while keeping the portfolio very diversified and ready to embrace continuous evolution of the theme investment opportunities.
- For the full methodology and full list of the changes, please refer to the Index Methodology.
The changes will be reflected in the ordinary rebalancing after the close of trading on September 20, 2024.