Roundhill AI ETF Has Higher Costs but Stronger Returns Than iShares Tech
Key Points
Roundhill Generative AI & Technology ETF carries a significantly higher expense ratio than iShares U.S. Technology ETF.
iShares' ETF provides broader exposure to 139 holdings compared to the more concentrated portfolio of 45 holdings in Roundhill's fund.
The Roundhill ETF has demonstrated higher historical volatility and a deeper maximum drawdown than its iShares counterpart.
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In today’s ETF matchup, Roundhill Generative AI & Technology ETF (NYSEMKT:CHAT) offers concentrated, active exposure to generative artificial intelligence, while iShares U.S. Technology ETF (NYSEMKT:IYW) provides a broader, lower-cost index-based approach to the established domestic technology sector.
Both funds provide a gateway to high-growth tech, but their underlying strategies and cost structures differ significantly. While IYW tracks a diversified index of established domestic tech giants, CHAT is an actively managed fund specifically targeting the emerging theme of generative AI.
Snapshot (cost & size)
| Metric | IYW | CHAT |
|---|---|---|
| Issuer | iShares | Roundhill Investments |
| Expense ratio | 0.38% | 0.75% |
| 1-yr return (as of June 23, 2026) | 48.2% | 111.1% |
| Dividend yield | 0.11% | 1.7% |
| Beta | 1.43 | 1.91 |
| AUM | $25.6 billion | $2.25 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The iShares fund is the more affordable choice with an expense ratio of 0.38%. The Roundhill ETF offers a significantly higher dividend payout for investors seeking income alongside tech growth.
Performance & risk comparison
| Metric | IYW | CHAT |
|---|---|---|
| Max drawdown (3 yr) | (26.50%) | (31.30%) |
| Growth of $1,000 over 3 years (total return) | $2,355 | $3,520 |
What's inside
The Roundhill ETF is an actively managed fund focusing on generative artificial intelligence, which management views as a profound technological shift. Its portfolio is concentrated, with 45 holdings, primarily in technology at 77%, communication services at 17%, and consumer cyclical at 6%. Its largest positions include Nvidia (NASDAQ:NVDA) at 6.39%, Alphabet (NASDAQ:GOOGL) at 5.07%, and SK Hynix at 5.07%. Launched in 2023, it has paid $1.68 per share in dividends over the trailing 12 months.
The iShares fund offers broader reach, with 139 holdings, and tracks an index of American technology companies. Its largest positions include Nvidia at 14.73%, Apple (NASDAQ:AAPL) at 12.87%, and Alphabet at 6.45%. Launched in 2000, this fund has a trailing-12-month dividend payout of $0.26 per share.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
The tech ETFs differ in several meaningful ways. CHAT has a higher expense ratio, but also a higher dividend yield and better one- and three-year returns. It's also actively managed, which helps explain in part the elevated expense ratio relative to the iShares fund. And despite holding far fewer stocks, no single position in CHAT exceeds 7%. Its top 10 holdings are largely in the 3%-5% range in terms of portfolio weighting.
In contrast, the iShares ETF owns more than twice as many stocks, but the weighting is concentrated in just a few big names. Its top three holdings account for roughly 34% of the portfolio. (CHAT's top three make up about 17% of the fund.)
All else equal, I tend to prefer lower-cost funds, but CHAT has performed strongly in recent years, so this may be a case of "you get what you pay for." Plus, I like that the Roundhill ETF is not nearly as concentrated as the iShares fund. If I were to invest in either of these names, I'd opt for CHAT, but make it a modest position in a well-rounded portfolio.
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Erin Kennedy has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Apple, and Nvidia. The Motley Fool has a disclosure policy.
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