How Gina Rinehart is betting big on AI and tech with ETFs

Australia’s richest person, Gina Rinehart, has made her money out of mining iron ore but, like many other investors, has seen the need to diversify her investment portfolio. Lately, she’s favouring exchange-traded funds.

Rinehart’s most recent corporate filings, made via her company Hancock Prospecting, give us a rare insight into how investors can widen their investment through ETFs.

In common with many entrepreneurs who make a fortune from a single source, Rinehart’s wider investment activities can be hit or miss. Most recently, Rinehart made headlines with an investment valued at $1.9bn in Elon Musk’s SpaceX. At one stage, she was losing $5m a day on the investment but Rinehart used the share weakness to top up her holding. The share price has since recovered.

Rinehart has also directly invested in miners such as Arafura and dabbled in media through Fairfax and Ten, and most recently through Southern Cross and Donald Trump’s Truth Social media.

But a closer look at Rinehart’s US portfolio outlines an approach to diversification that can be replicated by any investor since these ETFs (or their Australian equivalents) are low-cost and easily available. They are by no means exclusively tailored to high-net-worth individuals.

In fact, Rinehart isn’t the only wealthy investor chasing growth from ETFs.

“What I am noticing all the time is that quite wealthy clients are increasingly looking at ETFs,” Centaur Financial Services chief executive Hugh Robertson says.

“They have been disappointed by stockbroker recommendations, and they know that active managed funds rarely beat the market average.”

Rinehart’s top ETF holdings can be broken into two groups – US market index funds that aim to closely track the broader returns of leading US markets, and thematic ETFs almost exclusively devoted to AI-related activities and technology.

Already this year the S&P 500 has again streaked ahead of the ASX 200, returning 12 per cent compared to 4 per cent.

Gina Rinehart’s index fund investments

To capture the widest moves on the US market, Rinehart holds the Invesco QQQ Trust Series, which is one of the most popular ETFs in the US and mirrors the tech-heavy Nasdaq 100 index. Through this fund, Rinehart gets exposure to the so-called “tech titans”. This is her biggest commitment to ETFs, with her holding in this fund valued at around $1.3bn.

Just for good measure, she also has some direct holdings in big-name tech stocks such as Amazon (valued at $135m), Microsoft ($113m) and Nvidia ($70m).

Invesco’s QQQ equivalents on the ASX would be the Betashares Nasdaq 100 ETF and the Global X US 100 ETF.

The second main index ETF Rinehart holds is the State Street SPDR Portfolio S&P 400 Mid Cap ETF.

This is probably the most conservative and mainstream of the five ETFs held by Rinehart.

The fund steers clear of the tech titans that are already well represented in the Rinehart portfolio, concentrating instead on a market segment between large cap and small cap – the leading stocks here would be cloud IT player Twilio, data storage operator Everpure and specialty materials group ATI, along with traditional stocks such as food group US Foods Holding and retailer Burlington Stores.

The equivalent ETF on the ASX would be the iShares S&P Mid Cap ETF.

Billionaires aren’t ‘too big for ETFs’

Chris Brycki, CEO of Stockspot, which offers ETF-based portfolios to retail investors, says it’s a misnomer that the top end of town isn’t scooping up these products, which have already attracted inflows this year to date of $36.5bn, signalling the funds will easily pass last year’s total inflows of $53bn.

“I think there might be a misconception that billionaires are too big for ETFs, but this is clearly not true,” he says.

“In something like AI, for very wealthy investors the approach is no different to investors with a lot less money. ETFs can be a way to take a position in a broad theme which you believe is going to be a winner and you use them because you are never sure who those individual winners will be.”

Though thematic ETFs – which concentrate on a sector as opposed to a complete market – have often been criticised as a dilution of the original notion of pure passive investing, they are increasingly popular with investors at all levels.

“There is no bias whatever among very sophisticated investors for ETFs, including thematic ETFs,” Robertson says.

“More often we find that investors just want to make sure that they have an allocation to an area; it may not be perfect, but it is perfectly adequate.”

Gina Rinehart’s thematic ETF investments

Rinehart’s thematic ETFs are:

Global X Artificial Intelligence and Technology ETF

On the ASX, the GlobalX group has an extremely similar (though differently tagged) fund, the Global X Artificial Intelligence ETF. Top holdings here include mostly hyperscalers such as Microsoft, Oracle, Amazon, Alphabet, along with Palantir and Nvidia.

Separately, Global X also offers a Semiconductor ETF, which is a more concentrated version of the AI fund specialising in the chip makers that comprise the foundation layer of AI investing: Top holdings are chip makers such as Micron, AMD, TSMC, Broadcom and Nvidia, SY Hynix and Intel.

iShares Future AI and Tech ETF

This fund appears similar to the other AI-focused ETFs except it offers the variation that is a “market-weighted” fund, which means the fund manager applies specific capitalisation rules across the fund to try to stop any single company from becoming over-represented on the index due to a dramatic escalation of a company’s share price.

Two equivalent locally listed funds would be the Betashares Global Tech Leaders ETF and the Global X AI ETF, though neither of these is market-weighted.

Ark Autonomous Technology and Robotics ETF

Perhaps the outlier among the Rinehart ETFs is the Ark Autonomous Technology and Robotics ETF, which, unlike the other ETFs, has a more volatile history and would be the most “active” or least traditional of the ETFs represented in the US filings.

Ark Invest’s founder, CEO and chief investment officer is Cathie Wood, who has managed to have very lucrative periods for her funds and equally unsuccessful stretches due to her high conviction on certain entrepreneurs. Wood – in common with Rinehart – is a big fan of Elon Musk; she has held Tesla through thick and thin.

There is no equivalent to this fund on the ASX due to the singular nature of Wood. No surprise the fund’s biggest holding is Tesla and its third-biggest holding is SpaceX.

However, over the past five years, while ARK is up 61 per cent, the Nasdaq 100 is up 95 per cent.