Earlier this month, cloud service startup CoreWeave experienced bond interest rates exceeding 15%, which caused the company's stock price to fall by over 30% and also brought renewed concerns regarding debts related to AI. By 2030, AI's capital expenditures are expected to exceed one trillion dollars annually, with an increasing portion of these expenditures to be financed through bond issuance. Against this backdrop, at least five issuers have recently submitted ETF applications focusing on loans related to AI.

21Shares macro director Stephen Coltman stated: "If you want to obtain an exposure to AI, then compared to the stock market, the pricing of taking risks in the credit market indeed seems more worthwhile. However, given the significant differences in the types of debt issued by AI companies, due diligence is of paramount importance. 'Packaging it as ETF and then saying 'this is AI debt' does not fully elucidate what the real risks are, nor where you stand within the capital structure.'

In addition, during times of crisis, the liquidity in credit markets often freezes, which means that investors may be forced to trade at a discount. Coltman says, "If redemptions occur while the underlying market is essentially frozen, then it becomes difficult to allow funds to flow in and out."

Even before the news related to CoreWeave emerged, the debt issue of AI was already a controversial topic. An analyst from Bloomberg Industry Research Bloomberg Intelligence ETF stated that although not every product may be successful, the demand is strong enough, and it is possible that one or two could emerge as winners.

He said, "There are many people who are bullish and bearish on such products nowadays, but anything with a similar theme packaged in the ETF framework often performs quite well."

Some differences in the composition of these funds may significantly affect their performance. Seyffart indicates: "Ordinary investors may only see the names of these products but do not truly understand how different they are from each other. Just as we do when looking at any ETF, it is indeed necessary to see the internal structure and strive to understand what their strategies are doing and what assets they hold."

From the preliminary declaration documents, some differences can already be observed:

• Proactively managed BondBloxx AI Infrastructure Debt ETF, Allspring AI Infrastructure Bond ETF, and Bitwise AI Bond ETF will invest in a variety of debt products issued by AI infrastructure companies, including non-investment-grade debt, securitized debt instruments, as well as debt issued by special purpose vehicles.
• Defiance AI Infrastructure Bond ETF will also invest in a variety of debts, but it tracks an index rather than adopting active management.