BlackRock’s new AI and technology ETF is trading on the TSX under the ticker XBAI. The launch brings the firm’s first fundamental active equity ETF to Canada.
BNN Bloomberg spoke with Jay Jacobs, U.S. head of equity ETFs at BlackRock, about the strategy behind the fund and how ETFs have evolved from broad index products into tools for more targeted investing.
Key Takeaways
- AI investment opportunities extend across chips, data centres, power, proprietary models and applications, including adoption in health care.
- AI could drive significant growth for some companies while making other business models obsolete, particularly in commoditized software.
- Active management uses fundamental research to identify potential long-term winners across the AI value chain.
- Concentrated portfolios of 25 to 50 holdings can experience greater volatility as investors assess how companies will capture value from AI.
- The investment opportunity could broaden as more large language model developers go public and more businesses incorporate AI into their applications.
Read the full transcript below:
ANDREW: BlackRock’s new AI and technology ETF is now trading on the TSX under the ticker XBAI. The idea here is to invest mainly in U.S. and international companies in the AI and technology sectors. How is BlackRock approaching the AI trade? We’re joined by Jay Jacobs, U.S. head of equity ETFs at BlackRock. Jay, great to see you. Thanks very much. And are you getting — you must be getting some pushback here. Are people saying, “Well, you’re a bit late to the AI boom with this new ETF”?
JAY: I think we’re still very much in the early innings of artificial intelligence. In fact, this is something that is going to take years to fully play out as we see the advancements in this technology and some of the adoption across really all sectors of the economy that can leverage artificial intelligence. So we think this is early stages, and there’s plenty of financial opportunity for investors.
ANDREW: Is there a risk that this will just become a general tech fund? Will you be able to differentiate it?
JAY: No. In fact, when you look at the different opportunities in the economy, there’s also risks that artificial intelligence could turn some business models obsolete or fully replace them. The tech sector, I think, is a really good example of this. There’s some companies that are absolutely leading at the forefront of artificial intelligence and could see immense growth over the next several years. There’s also companies that maybe their business models don’t have as big of a moats around them, particularly in maybe sort of more commoditized software businesses. So this does not look like just tech sector play. And also, when you think about some of the opportunities outside of technology, AI is really starting to permeate across the economy. You see the importance of raw materials. You see the importance of power. You see the importance of AI adopters in health care and other sectors, and so this is not just a tech play anymore. This is a much broader exposure.
ANDREW: So you’re saying that this is a something of a first for Canada. It’s the first fundamental active equity ETF, symbol as XBAI. So the managers will buy and sell stocks within the ETF?
JAY: That’s right. So a lot of the work that has to be done around artificial intelligence is first defining the opportunity. There’s so many companies out there that may or may not be related to artificial intelligence, defining the space through a rigorous research-driven approach that really looks across the entire AI value chain. Everything from the digital infrastructure, the chip, the data centres, the power that goes into artificial intelligence, to the middle layer of data and proprietary models that are powering some of the frontier advancements, to the applications and the software that are adopting artificial intelligence. It’s an entire tech stack of artificial intelligence-related names. Our fundamental research analysts and PMs can identify where the opportunities are across that tech stack and lean into the companies that they think are going to be winners over the long run.
ANDREW: Is this based, or will it mirror an existing ETF in the U.S. market?
JAY: I would say it’s very similar to a fund that we run in the United States, which is now the largest AI ETF in the U.S., with a similar — with the same portfolio manager, Tony Kim. So a lot of the experience and client receptivity has absolutely driven our excitement to bring this to Canada as well.
ANDREW: What’s the ticker on that other — that one, the tech ETF in the States?
JAY: That one’s BAI. Yeah, very similar. You get an X when you buy it in Canada.
ANDREW: Right. ETFs, obviously, BlackRock’s been all over it and has gained with a fantastic growth in this sector, this product category.
JAY: Absolutely, ETFs continue to be the product of choice for so many investors out there because of their efficiency, their tradability, their transparency. So for many investors, ETFs have just become the building blocks of choice for portfolios. But what I think has really evolved in the ETF space over the last five or 10 years is ETFs used to be really synonymous with large index-based exposures, and when you see a fund like BAI that’s thematic, that’s actively managed, it shows how much an ETF can be used to provide other types of strategies and exposures, more granular ones, more dynamic ones that evolve with some of the major forces changing the economy. So ETFs are not just about broad market indexes anymore; they can be about so much more in the active space too.
ANDREW: I’m just looking at the performance of BAI. I believe you launched it in October of 2024, and certainly it has beaten the Nasdaq composite index handily over that period. BAI with a total return of almost 80 per cent. It does look as though it’s a little more volatile than the Nasdaq composite, though. It has come down from its highs of the summer pretty radically.
JAY: That’s right. That’s to be expected when you focus in on high-conviction names within a theme. We are not looking to give, you know, exposure to 100 names here. This could be 25 to 50 names. It’s going to be more laser-focused on AI, which we’re — because we’re in the early stage. The markets are still trying to understand what is the full investment opportunity in artificial intelligence. What is the value capture that these companies have? That creates volatility within the theme, but that volatility also creates the opportunity for active managers like our team, Tony Kim, to find really the winners within the space.
ANDREW: Do you think that it will hold the Anthropic and OpenAI IPOs when they come out? I guess you’re probably going to hold at least some of them.
JAY: I can’t speculate on what the PM might do going forward, but I think it’s really about looking at the entire AI value chain. Certainly, there’s been a huge focus thus far on the infrastructure side of artificial intelligence, the semiconductors companies, which make up many of the top 10 names in the fund today. Over time, we’re going to see that opportunity evolve as you start to see more large language model developers come to the market. As you see more companies adopting artificial intelligence in their applications, it’s really going to continue to expand this ecosystem of AI-related companies far across the economy.
ANDREW: Thank you so much, Jay. Really appreciate it. Thank you, Jay Jacobs, U.S. head of equity ETFs at BlackRock.
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This BNN Bloomberg summary and transcript of the Oct. 15, 2026 interview with Jay Jacobs are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
