When it comes to Hollywood, sequels are rarely better than the original. In the world of thematic ETFs, however, sequels are often designed to fix the holes left by the first act. So when I was alerted to the recent debut of the Dan Ives Wedbush AI Power & Infrastructure ETF (IVEP) now three weeks young, I initially figured this was a case of Wedbush going back to the well to offer the same thing, just by a different name.
This is all too common in the fund world – and it has been for decades. Issuers launch funds that sound different, but act largely the same.
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Following the massive success of the Dan Ives Wedbush AI Revolution ETF (IVES), is the IVEP sequel just a repeat? The answer is a definitive “no.”
While IVES is about the brain of AI (software and consumer tech), IVEP is about the circulatory system. That is, the power, cooling, and raw materials that keep the lights on. So indeed, they are less like chips and chips, and more like chips and dip.
As is the case with ETFs typically, it is all about the index. In both cases, these funds are essentially tracking an established, mechanically driven basket of stock holdings. They are updated and refreshed at specific time intervals.
www.barchart.com IVEP tracks the Solactive Wedbush AI Power & Infrastructure Index, while IVES is a tech-heavy basket of 30 pure-play AI stocks. One can argue it is too much like a Mag-7 or QQQ ETF. But it is built for capital appreciation from the companies selling the AI dream.
By contrast, IVEP targets the physical backbone of the AI cycle. It holds companies like GE Vernova (GEV), Energizer (ENR), and Eaton (ETN). These aren’t tech stocks in the traditional sense. They are industrial and utility giants that handle grid modernization, electrification, and data center cooling.
Thought of another way, IVEP is about the non-tech side of the mega-AI trade. As AI data centers grow, they are consuming power at a rate that traditional utilities can’t handle. IVEP might be a focused way for investors to capture the companies solving that specific power crisis. An exposure that is almost entirely absent from broad tech ETFs. And a theme that gets more timely, the longer the Iran War continues.
IVEP’s tendency toward industrials and not tech means its portfolio basket will likely trade at a much lower price-earnings multiple than IVES possibly could. That makes IVEP a better bet in a market climate where the software angle on the AI trade suddenly comes under fire from investors.
Ives’ star power on Wall Street, especially with a younger generation of investors, puts IVEP in position to be an asset-gathering beast like IVES, which debuted about 11 months ago and currently manages just short of a cool $1 billion in assets. And in the case of this sequel, it is really more of a complementary piece. That’s a welcome sign for ETF investors, in an era often characterized by unending sameness and high return correlation.
Rob Isbitts created the ROAR Score, based on his 40+ years of technical analysis experience. ROAR helps DIY investors manage risk and create their own portfolios. For Rob’s written research, check out ETFYourself.com.
On the date of publication, Rob Isbitts did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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