The Roundhill Generative AI & Technology ETF (NYSEMKT:CHAT) and the Fidelity MSCI Information Technology Index ETF (NYSEMKT:FTEC) both target the fast-moving technology space, but they do so with different philosophies.
While FTEC tracks a market-cap-weighted index of the entire U.S. technology sector, CHAT uses a proprietary strategy to pinpoint companies specifically benefiting from the rise of generative AI. Here’s how the two funds stack up.
Snapshot (cost & size)
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
FTEC is notably more affordable with its 0.08% expense ratio, which can save investors money on fees. While the Roundhill fund charges a premium 0.75% expense ratio, it has provided a higher dividend yield — which could appeal to income-focused investors.
Performance & risk comparison
What’s inside
CHAT focuses on companies that power AI development, and its portfolio is relatively concentrated, with just 49 holdings. Its largest positions include Nvidia, Alphabet, and Broadcom. It was launched in 2023 and has paid $1.68 per share in dividends over the trailing 12 months.
FTEC captures the broader technology market with 285 holdings, and its largest positions include Nvidia, Apple, and Microsoft. It was launched in 2013 and has paid $1.00 per share in dividends over the trailing 12 months.
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Which looks like the better buy
FTEC and CHAT offer different approaches to the technology sector, and the better buy for you will depend on your goals and risk tolerance.
CHAT is the more lucrative of the two, outperforming FTEC in recent years. It’s also more volatile, however, and considering the fund has existed for only around three years, there’s not much history to examine.
The two funds also differ in diversification. CHAT is very concentrated, both in terms of the number of holdings and sector focus. AI is a particularly uncertain subsector, so, given the limited diversification and focus on AI stocks, CHAT is likely to be the more volatile of the two funds.
