Here are two different ETFs that I reckon are worth weighing up today for a Stocks and Shares ISA.

The AI revolution

Let’s start with the iShares AI Innovation Active ETF (LSE:IART). This fund holds 41 stocks that are central to, or benefitting from, artificial intelligence (AI) technology.

Now, AI’s a particularly hot topic right now and causing a lot of headlines. Some think we’re in an ‘AI bubble’ that might be about to pop, which, if true, would obviously be negative for this ETF’s performance.

However, what’s certain is that the big four cloud giants (Amazon, Google, Meta, and Microsoft) plan to spend upwards of $650bn in 2026, largely on AI infrastructure.

Amazon’s CEO recently said: “We’re going to invest aggressively here, and we’re going to invest to be the leader in this space [AI/cloud computing]”.

These colossal spending commitments are set to benefit many of the companies in this ETF. These include chipmakers Nvidia, Broadcom, Advanced Micro Devices (AMD), and Taiwan Semiconductor (TSMC), as well as chip equipment firms like Lam Research and Advantest.

Basically, these are the picks and shovels of the AI revolution. In other words, the companies supplying the physical equipment and infrastructure required to run AI.

Elsewhere in the ETF, there are high-quality tech names such as Meta, Snowflake, and Palantir. These are all investing heavily in AI or, in the case of Palantir, seeing their growth accelerate dramatically due to the AI boom.

The ETF’s fallen 7.5% since October, offering what I think is an attractive entry point to consider.

Passive income

Next, I want to highlight the iShares MSCI Target UK Real Estate ETF (LSE:UKRE). As the name suggests, this fund holds a number of UK real estate investment trusts (REITs), including Segro, LondonMetric Property, Tritax Big Box, and Primary Health Properties.

These REITs offer exposure to an incredibly wide range of property types, such as e-commerce warehouses, urban industrial locations, hotels, theme parks, data centres, and GP surgeries. They pay out at least 90% of their rental profits as dividends.

Better still, because the sector has sold off dramatically since 2022, they’re now offering chunky dividend yields. As such, this iShares Real Estate ETF is also offering an attractive 6.1% yield.

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Now, a big risk here is that the UK economy tanks at some point. In this scenario, some tenants could be forced to downsize, impacting occupancy rates and possibly even dividends.

However, what I like here is that 39% of the ETF is in inflation-linked gilts (UK government bonds). Obviously these are much more reliable income sources than REITs, thereby offering a bit more stability.

Looking ahead, the fund should do well if interest rates keep falling and investors warm back up to REITs. The Bank of England has just signalled that further rate cuts are “likely” this year.

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With this in mind, here are three quality ETFs to consider for a hopefully five-star Stocks and Shares ISA.

AI fund

Nvidia‘s blockbuster interims last week underline the huge investment opportunity of artificial intelligence (AI). These showed revenues up a 56% in the three months to June, to a mammoth $46.7bn as demand for its high-power microchips surged.

The AI growth potential is huge, though investing in one company to capitalise on it carries significant concentration risk. This is why the iShares AI Innovation Active UCITS ETF (LSE:IART) — which holds 39 different tech shares — could be a balanced option to consider.

As well as holding Nvidia shares, the fund owns other AI pioneers including social media giant Meta, software developer Microsoft and cloud storage provider Snowflake.

This iShares product has only been in existence since January. Its performance has been turbulent as concerns over the economic outlook have depressed investor confidence. But I’m optimistic it will deliver big long-term returns as AI adoption gallops higher.

Value hero

Owning value shares in a portfolio can safeguard it from stock market volatility. The theory is that their cheapness can provide a cushion when everything else is falling.

Running with this idea, I believe the Xtrackers MSCI World Value ETF (LSE:XDEV) is worth serious attention. It holds roughly 400 shares in its portfolio, and bases its strategy around popular metrics like the price-to-earnings (P/E) and price-to-book (P/B) ratio.

Underlining its value credentials, some of its largest holdings include chipmakers Qualcomm and Intel. These also have substantial growth potential amid the AI boom. But they trade at a fraction of the price of some of Silicon Valley’s big beasts like Nvidia.

I also like this Xtrackers ETF because of its wide geographic footprint. Be aware however, that US shares represent its single largest weighting (38%), which may present a problem if investors rotate out of Wall Street equities.

Dividend ETF

A portfolio with dividend shares can help investors make a decent return when stock market weakness limits the potential for capital gains. I believe the Global X SuperDividend ETF (LSE:SDIP) is one such fund to look at for a long-term passive income.

This ETF tracks the performance of 100 of the highest-yielding dividend shares on the planet. As a consequence, it has one of the largest forward dividend yields of any London-listed ETF, at 9.7%.

What I also like is its strategy of paying dividends out monthly (it’s done this consistently for 13 years). This gives investors regular access to cash rewards, and therefore the chance to reinvest them sooner to boost the wealth compounding effect.

Despite its high weighting of cyclical and energy shares — these account for more than 50% of the entire fund — I think it’s a top passive income source to consider.

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However, for growth investors wanting something a bit more niche, I think these three ETFs are worth a gander.

Digitilisation

Up first is the iShares Digitalisation ETF (LSE:DGTL). This holds 206 stocks that are generating significant revenues but still have growth potential due to the “increasing prevalence and application of digital services”. What I like here is that the ETF isn’t dominated by the usual tech names like Microsoft, Apple and Nvidia, which would make it similar to the S&P 500. As of 27 August, the top five positions were occupied by Oracle, Shopify, Cash App-owner Block, used car vendor Carvana, and eBay.

Other larger holdings include Netflix, Amazon, and Spotify. Meanwhile, digital payments is a prominent theme, through the likes of Visa, Mastercard, PayPal and Latin America’s MercadoLibre.

Digitalisation is a structural shift reshaping how the world buys (e-commerce/contactless payments), works (cloud computing), and plays (social media and streaming). To me, the ETF looks well placed to benefit from this, even though it echoes the risks of each individual stock it holds. 

Robotics

The second one is iShares Automation & Robotics ETF (LSE:RBTX). This gives investors exposure to shares benefitting from the development of automatic and robotic technology.

Right now, this industry’s booming due to advances in artificial intelligence (AI). The ETF holds Advanced Micro Devices (AMD) and Nvidia in semiconductors, as well as plenty of industrial automation leaders such as ABB, Siemens, Rockwell Automation, and Emerson Electric.

One risk to be aware of here is that the top of the ETF does lean quite heavily into semiconductor stocks. If this one sector slumps — for example, due to a chip cycle downturn — then the fund could take a hit. Nvidia, for instance, is currently trading near an all-time high.

However, there are 139 different holdings, so it’s well diversified. And over time, I expect this one to do well too.

According to Zion Market Research, the global robotics and automation market’s estimated to grow at a compound annual rate of around 38.2% between 2024 and 2032.

Artificial intelligence

Of course, I couldn’t finish without including the biggest technological trend of our time: AI. The iShares AI Innovation Active ETF (LSE:IART) aims to tap into this spectacular growth by owning AI-related stocks.

Now, I’d say this ETF’s higher in risk because it was only launched in January. Consequently, it has just 39 holdings so far, meaning it’s more heavily concentrated.

Also, the base currency is US dollars. If the dollar weakens against sterling, returns could shrink when converted back (and vice versa). This currency risk also applies to the iShares Digitalisation ETF. 

Nevertheless, AI’s developing so rapidly that it could unlock incredible amounts of business productivity, especially as the technology’s still at a very early stage. Indeed, it’s slightly frightening.

We’re at the beginning of a new industrial revolution.

Nvidia CEO Jensen Huang.

As well as the tech giants, the ETF holds Snowflake and web security firm Cloudflare as top 10 holdings. Snowflake stock surged 20% on 28 August as company reported a blockbuster Q2, with growing adoption of its AI-powered data cloud.

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Here are three ETFs spanning cybersecurity, artificial intelligence (AI) and defence I think have tons of potential and are worth further research.

No longer a luxury

First up is L&G Cyber Security UCITS ETF (LSE: ISPY). This fund holds 41 stocks across the increasingly relevant cybersecurity industry. In recent weeks, Marks and Spencer, Co-op and Harrods have all been hit by cyber attacks.

On 27 May, Adidas was the latest firm to have customers’ personal information stolen. This highlights how cybersecurity spending is now a necessity rather than a luxury for organisations of all sizes.

The fund holds many top stocks in the space, including CrowdStrike, Cloudflare, and Palo Alto Networks. So far in 2025, CrowdStrike and Cloudflare are up 37% and 50% respectively.

The ETF’s share price is up 56% over the past two years. However, one consequence is that valuations are quite high across much of the portfolio. A risk here then is that the stock market pulls back, reducing the ETF’s value in the near term.

Over the long term though, I think it’s set up for further gains. AI’s creating an escalating arms race between cyber attackers (groups and nation states) and the defending companies in this ETF.

AI innovation

Sticking with AI, I think the iShares AI Innovation Active UCITS ETF (LSE: IART) is well worth considering. According to McKinsey Global Institute, AI software and services alone are projected to generate $15.5trn-$22.9trn in annual economic value by 2040!

As the name suggests, this ETF’s invested in firms doing a lot of AI innovation today. Top holdings include chip king Nvidia, Microsoft, which has a large stake in ChatGPT maker OpenAI, and Meta, the social media giant that’s using AI to improve targeted ads on Facebook and Instagram.

Now, one thing worth pointing out is that this actively-managed ETF was only launched in January. So there’s no track record of outperformance to go on, which adds a bit of risk.

However, I like that among the 39 holdings there are some smaller innovative names in there. These have the potential to eventually become tech giants in their own right. Examples include cloud-based data firm Snowflake, gaming platform Roblox, and Cloudflare (again).

Dual focus

The third fund is the HANetf Future of Defence ETF (LSE: NATO). Since launching in mid-2023, the share price has more than doubled.

This ETF has a dual focus. It provides exposure to companies benefitting from both NATO military and cyber defence spending. Top holdings include Germany’s Rheinmetall, the UK’s BAE Systems, and AI software giant Palantir.

While these stocks have been on fire recently, a cut to the US defence budget could hurt their upwards trajectory. Meanwhile, a global recession might lead to lower growth and earnings for some firms in the portfolio.

On the other hand, European nations are now committed to spending hundreds of billions on building their long-neglected defence capabilities. This is a powerful multi-decade trend that’s likely to push the ETF higher, over time.

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I already manage a Junior ISA for my daughter, but I’m planning to start a SIPP too. Here, I’ll explain why and what type of investing strategy I might use. 

Longer to compound

The main reason I want to start a SIPP is because my daughter won’t be taking the money out of hers for university or to help buy a first home (as with an ISA). Therefore, the portfolio will have many more decades to compound. 

If I invest £150 a month and generate an 8% annual return, the portfolio ends up worth roughly £70,000 after 18 years. Let that carry on for another 40 years without adding another penny? It grows to around £1.5m!

Now, I should mention that this calculation doesn’t include any investing platform fees. But even factoring those in, the end result would still be very large.

Safety in numbers

But what investing approach should I take? This is where it gets a bit more complicated for me. You see, my own ISA and SIPP portfolios are mainly geared for growth. In other words, I don’t mind taking on an extra bit of risk in my pursuit of market-beating returns.

This growth stock-focused approach continues to serve me well. As I type (9 May), one of my largest holdings — The Trade Desk — is up by 24% in a single day after a massive Q1 earnings beat.

However, it also fell 50% inside a month in my portfolio earlier this year. I’m not sure I want that level of risk and volatility in my daughter’s SIPP, even if it has many years to recover.

Therefore, I think different index funds, investment trusts and ETFs are probably the best route for me to take. They hold multiple stocks, helping spread risk, even if it results in lower overall returns than certain individual shares.

Investing in the future

That said, I still want my daughter’s portfolio to be involved in lucrative investing themes. One of the most powerful is likely to be artificial intelligence (AI), which most tech experts predict is going to be utterly transformative over the next few decades.

One option I’m considering is iShares AI Innovation Active UCITS ETF (LSE: IART). As the name suggests, this active fund focuses on companies at the forefront of AI innovation. These include AI chip king Nvidia, Snowflake, Amazon, and 35 other holdings.

A thing I like here is that it’s also invested in Asian firms, including Alibaba (China), Softbank (Japan), and Kakao (South Korea). In future, a huge amount of AI innovation’s likely to happen in the East (we saw this recently with China’s DeepSeek AI developments).

As for risks, the fund was only launched a few months ago, so doesn’t have a track record of outperformance. And it’s down 24% as the overall stock market has moved lower since February. But I believe in it and am considering exploiting the lower price by starting a long-term position when I open the Junior SIPP.

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Looking for ETFs that have the potential to deliver strong long-term returns? Here are three standout products worth a closer look.

A focus on quality

One product that I see as a great ‘core holding’ is the iShares Edge MSCI World Quality Factor UCITS ETF (LSE: IWQU). This is a global product however, it only invests in high-quality companies that have stable earnings and strong balance sheets.

This focus on quality can make a difference to returns, especially in down markets. This year, for example, the ETF’s only down about 1% versus a drop of about 7% for the standard iShares global ETF.

Of course, the downside to this product is that it excludes plenty of well-known companies. For example, it doesn’t hold Amazon at present.

The fact that it excludes a lot of companies can lead to underperformance versus the market at some stages of the market cycle. All things considered however, I reckon the focus on quality is a major plus.

An ETF for the AI revolution

I’m a big fan of thematic ETFs, and one I like the look of today is the iShares AI Innovation Active UCITS ETF (LSE: IART). As its name suggests, this product focuses on companies that are active in the artificial intelligence (AI) space.

Over the next decade, the AI industry’s likely to get exponentially bigger as businesses and individuals adopt the technology to increase efficiency. With this ETF, investors can get access to companies at the heart of the revolution, such as Nvidia, Amazon, and Snowflake.

Investors do need to manage risk carefully here though. Today, AI’s still in its infancy and the growth story in the years ahead may not be linear (meaning that stock prices are likely to be volatile).

This ETF’s also quite new (it was only launched in February). So it doesn’t have a long-term track record.

Bigger than AI?

While AI‘s going to be big, one area of technology that could be even bigger is cybersecurity. Some experts believe that this could be a $2trn industry in the years ahead.

One ETF that’s focused on this theme is the Legal & General Cyber Security UCITS ETF (LSE: ISPY). This provides exposure to around 35 different cybersecurity stocks globally.

There are some great names in this ETF including the likes of CrowdStrike, Fortinet, and Palo Alto Networks. All of these companies are generating strong growth today as businesses scramble to protect themselves from dangerous cyber threats.

Again though, risk needs to be carefully managed here. Given its focus on one specific industry, this ETF isn’t well diversified.

And while the cybersecurity industry has a lot of long-term growth potential (and is also quite defensive in nature), cybersecurity stocks can be volatile. So with this ETF, position sizing is important.

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