Pictet AI & Automation ETF (PBOT)

Pictet, a Swiss asset manager with a long history of thematic investing, created PBOT to capture a secular conviction: that companies building or deploying artificial intelligence and automation will outperform the broader market over the next decade or two. The fund does not track an index. Instead, a team of analysts at Pictet evaluates which global companies—wherever they trade—are meaningfully exposed to AI development or adoption. These holdings get weighted by that expected exposure, then bundled into a single fund.

This approach has a name: thematic investing. It differs fundamentally from index investing or stock-picking. An index fund simply buys a defined basket—the S&P 500 or the MSCI World. A stock-picker chooses individual companies believed to be undervalued or well-managed. A thematic fund chooses a narrative—artificial intelligence and automation—and buys all the publicly traded companies it believes will benefit from that narrative. The performance of PBOT therefore depends on whether the AI theme prospers and whether Pictet’s analysts have correctly identified the beneficiaries.

The fund’s holdings reflect that thinking. Semiconductor designers whose chips power AI systems. Cloud-computing providers offering AI services. Software companies embedding AI into productivity tools. Robotics and manufacturing firms deploying automation. Some holdings are traditional tech giants like Microsoft or Nvidia, already deeply committed to AI. Others are smaller, more specialized. A few may be companies in non-tech sectors—industrial automation, healthcare AI—that Pictet believes will ride the wave. The fund is not evenly weighted; it concentrates in what the Pictet analysts see as the highest-conviction opportunities.

Concentration is the price of conviction. Because PBOT is not diversified across sectors or regions the way a broad index is, a correction in tech stocks or a slowdown in AI adoption can drive it down sharply and quickly. The 2022 bear market was gentler on diversified index funds than on concentrated technology funds. PBOT would likely have been worse. But that same concentration is also why investors buy it: if they believed AI would be less important than other drivers of equity returns, they would buy a broad index instead. By choosing PBOT, an investor is placing a concentrated bet on the AI and automation thesis.

The fund carries a higher annual expense ratio than a simple index fund, reflecting both the cost of active management and the cost of trading a more concentrated, less liquid portfolio. Unlike a passive index fund, where holdings change only when the index changes, PBOT’s managers are constantly monitoring companies, adding them as their AI exposure becomes clear, and trimming or removing them as circumstances shift. This active management—whether it adds value—is inherently uncertain. Pictet’s analysts may be right that AI will dominate the next era of wealth creation, but they may also overestimate their ability to pick the winners. History suggests that concentrated thematic bets on new technologies sometimes deliver spectacular returns and sometimes crater dramatically.

Geography matters. The fund is global, not US-only, so it can own European AI companies, Chinese tech firms, and Japanese automation specialists. But it is still structured as a US-traded ETF, so it carries currency risk: if the dollar strengthens against other currencies, the international holdings become cheaper in dollar terms. A strong dollar usually helps unhedged US investors, but it helps them less when they own foreign stocks.

Pictet publishes a prospectus and factsheet that detail the exact holdings, the weight of the largest positions, and the sector breakdown. Investors considering PBOT should ask themselves whether they have conviction that AI and automation will be among the top growth drivers over the next five to ten years and whether they are comfortable concentrating 3% to 5% of a portfolio (or more) in that bet. Those questions have no right answer. But the fund is a clean vehicle for making exactly that bet if you decide you want to.

PBOT trades on major US exchanges with reasonable liquidity, so it can be bought or sold in seconds by most retail investors. But its value swings around the theme, not around the broad market. In a month when AI stocks are in favor, it will outperform broadly diversified funds. In a month when the market is rotating away from high-growth tech, it will underperform. Those swings are the point. If you buy a thematic fund, you are explicitly choosing to ride the theme’s volatility.