MW The biggest market for AI funds is Europe even as most holdings are American, Morningstar says

By Steve Goldstein

Absence makes the heart grow fonder - and that seems to be the case with European demand for funds that invest in artificial intelligence. According to Morningstar, the largest market for funds that invest in AI and big data are in Europe, even as the major players are mostly in the U.S.

European AI fund assets as of the end of May totaled $22.7 billion, out of the $38.1 billion globally as of the end of the first quarter, Morningstar said. The Allianz Global Artificial Intelligence Fund , on its own, has $6.3 billion in assets.

"Nearly all the most frequently held artificial intelligence + big data stocks globally are U.S.-listed and domiciled, underscoring the United States' leadership in the technology sector. There are no clear options for non-U.S. focused exposure," said Kenneth Lamont, a principal at Morningstar.

The least American concentrated fund still has nearly 60% allocated to U.S. stocks, Morningstar says.

Nvidia $(NVDA)$, the microchip company fueling the AI wave, is quite obviously the top holding, in 89% of these funds. Microsoft $(MSFT)$, Alphabet $(GOOGL)$, Meta Platforms $(META)$ and Amazon.com $(AMZN)$ all are in at least 70% of these funds.

But the Morningstar report says the funds differentiate themselves by their exposure to less obvious companies outside of the Magnificent Seven. Broadcom $(AVGO)$ is the widest held non Mag 7 company in these funds, followed by ServiceNow (NOW), Oracle $(ORCL)$, Advanced Micro Devices $(AMD)$, Salesforce $(CRM)$ and Marvell Technologies $(MRVL)$, all of which are held by at least half of these funds.

Comparing the two largest funds in the AI space, the Allianz fund and the Global X AI & Tech ETF AIQ, and they share just three of the same holdings in their top 10. The top Allianz holdings were Nvidia, Broadcom and Eli Lilly $(LLY)$, while the top holdings in the Global X fund were Tencent (HK:700), Alibaba $(BABA)$ and Samsung (KR:005930).

The iShares AI Adopters & Applications UCITS ETF UK:AIAA is notable for a low Magnificent Seven weighting of just 8%.

The funds collectively have performed well since their launch but are more volatile than the broader market, Morningstar says. That these funds rallied after the launch of ChatGPT in late 2002, and tumbled after the news of the success of DeepSeek's model was publicized, showed that the theme has distinct risk and return drivers.

There have been AI and big data funds since at least 2015, the report noted.

-Steve Goldstein

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June 12, 2025 02:44 ET (06:44 GMT)

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