Adam Patti

Adam Patti has been in the ETF market since 2001, when he was running a division at Time Warner called Fortune Indexes that created a stock index based on the Fortune 500 and partnered with State Street to launch the FFF ETF. He founded Index IQ in 2006 as one of the earliest ETF issuers (roughly the 18th to launch), focused on packaging institutional-quality liquid alternatives in an ETF wrapper. He sold Index IQ to New York Life in 2015, helped roll out their ETF platform globally, stepped away from the industry for a few years, and then partnered with John McNeill and DVX Ventures to create VistaShares.

On this episode of Behind the Ticker, Adam walks Brad through AIS, the VistaShares Artificial Intelligence Supercycle ETF. It takes a "bill of materials" approach to AI investing, focusing on what actually gets built (semiconductors, data centers, cooling systems, infrastructure) rather than the applications that sit on top.

The Problem With Existing AI ETFs

Patti's critique of the existing AI ETF space is pointed: most don't give you the exposure their names promise. Look under the hood and you're getting the Mag Seven for the vast majority of your exposure, with some Netflix, Tencent, and Salesforce thrown in. These are massive companies making hundred-billion-dollar AI investments, and they'll likely be significant consumer-facing players once AI applications mature. But that's not how to play AI right now.

"Without the infrastructure, there's no consumer-facing applications," Patti argued. "Without developing the compute to take these AI models from the training portion of development to the inference portion and beyond, there's no innovation, there's no ability to create that value for consumers." AIS is designed to invest in the infrastructure: data center components, semiconductor supply chains, and the physical systems that make AI possible.

Supply Chain Analysis and Bill of Materials

The portfolio construction starts with supply chain analysis. What are the drivers of AI? Where is the investment going? What components are required to build AI infrastructure? Then comes the bill of materials: how much does it cost to build an AI data center? What percentage goes to cooling systems, fiber optic cable, racking, power systems? On the semiconductor side, what are the GPUs, VRAMs, cooling systems, and other components that go into building the chips themselves?

Holdings are weighted first by their contribution to the AI supply chain. If cooling systems represent 25% of a data center build, companies in the cooling bucket get a 25% aggregate weight. But the analysis goes deeper: just because a company sells cooling systems doesn't mean it's selling to AI data centers. The team examines project pipelines, AI-specific revenue, and actual customer relationships. "You need to understand what are the projects that they're working on, what is their pipeline looking like, how much revenue are they actually getting from AI projects," Patti explained.

The Investment Committee

On top of the rules-based core sits an active overlay managed by an investment committee of four people, split into two groups. The "practitioners" are John McNeill (former president of Tesla, former CLO of Lyft, GM board member) and Sunny Madra (president of Grok, one of the leading AI companies). Their job is to identify risks and opportunities before others see them. "Sunny is building data centers around the world," Patti noted. "He knows who the players are probably before most people do because he's working with them." The portfolio construction side includes Patti and Professor Robert Whitelaw, former dean of NYU Stern's undergraduate college and former chairman of their finance department. The rules-based core is rebalanced twice a year, but the active overlay allows rapid adjustments in a space that moves fast.

Super Cycles Beyond AI

VistaShares' thesis is that four super cycles are happening simultaneously: AI, robotics, electrification, and biotech. Each is a technology revolution on the scale of the internet. They chose AI as their first product because it's the most active and investable right now, with the clearest supply chain to map. Future products will address the other super cycles, and the bill-of-materials methodology is designed to extend to those areas as well. Consumer applications will eventually become a significant piece of the AI supply chain, but not today. Infrastructure comes first.

Key Takeaways

• AIS uses a "bill of materials" approach, weighting holdings by their contribution to the AI data center supply chain (semiconductors, cooling, power, infrastructure), not by market cap. Revenue from actual AI projects is verified.
• The investment committee includes John McNeill (ex-Tesla president, GM board) and Sunny Madra (Grok president) as practitioners with real-time visibility into AI infrastructure deals.
• Most existing AI ETFs deliver Mag Seven exposure with AI branding. AIS deliberately focuses on infrastructure components, not consumer applications.
• Adam Patti founded Index IQ in 2006 (sold to New York Life in 2015) and has been in the ETF market since 2001. VistaShares is his second ETF company.
• Positioned as a 3-5% growth equity satellite. VistaShares plans to extend the super cycle methodology to robotics, electrification, and biotech in future products.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.