Better Artificial Intelligence ETF: Technology Select Sector SPDR Fund vs. Roundhill Generative AI & Technology ETF
Key Points
The Technology Select Sector SPDR Fund and the Roundhill Generative AI & Technology ETF both include AI-related stock holdings.
The Technology Select Sector SPDR Fund offers a low expense ratio and a broad range of tech stocks.
The Roundhill Generative AI & Technology ETF is actively managed, and focuses on AI companies.
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The Technology Select Sector SPDR Fund (NYSEMKT:XLK) and the Roundhill Generative AI & Technology ETF (NYSEMKT:CHAT) both provide investment exposure to the hot field of artificial intelligence.
The Technology Select Sector SPDR Fund delivers lower costs, a long track record, and broad technology sector coverage. It tracks the Technology Select Sector Index, representing the technology segment of the S&P 500.
The Roundhill Generative AI & Technology ETF focuses on generative artificial intelligence. It is an actively-managed fund targeting companies at the frontier of generative AI.
Here’s how these two technology-focused ETFs compare across key metrics.
Snapshot (cost & size)
| Metric | CHAT | XLK |
|---|---|---|
| Issuer | Roundhill Investments | SPDR |
| Expense ratio | 0.75% | 0.08% |
| 1-yr return (as of Oct. 27, 2025) | 72.10% | 31.77% |
| Beta | 1.65 | 1.23 |
| AUM | $1.1 billion | $98.24 billion |
Beta measures price volatility relative to the S&P 500, using daily returns.
The Technology Select Sector SPDR Fund is far more affordable, with an expense ratio of 0.08% versus Roundhill Generative AI & Technology ETF's 0.75%.
Performance & risk comparison
| Metric | CHAT | XLK |
|---|---|---|
| Max drawdown (5 y) | (31.34%) | (27.73%) |
| Growth of $1,000 over 5 years | $2,587 | $2,822 |
What's inside
The Technology Select Sector SPDR Fund provides exposure to the S&P 500’s technology sector, with 71 holdings and a track record of 26.9 years. Its top holdings include Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Apple (NASDAQ:AAPL), offering liquidity.
The Roundhill Generative AI & Technology ETF, by contrast, is more concentrated in generative AI themes, holding 45 companies. Its largest positions are Nvidia (NASDAQ:NVDA), Alphabet (NASDAQ:GOOGL), and Oracle (NYSE:ORCL). The fund applies an ESG screen and is actively managed, resulting in more volatility and sector concentration.
For more guidance on ETF investing, check out the full guide at this link.
Foolish take
Although both ETFs provide exposure to artificial intelligence stocks, they possess very different pros and cons.
The Technology Select Sector SPDR Fund has existed for decades, providing more insight into its performance over time. It's also substantially cheaper than the Roundhill Generative AI & Technology ETF when comparing expense ratios. While holdings include AI heavyweights such as Nvidia, Broadcom, and Microsoft, it also gives you a more diverse basket of tech stocks, such as Cisco and Apple.
The Roundhill Generative AI & Technology ETF has only been around since 2023, which makes sense given generative AI didn't take off until the release of ChatGPT in the fall of 2022. But its focus on this hot market led to an impressive one-year return of 72%, more than double the Technology Select Sector SPDR Fund.
Which ETF to invest in depends on your risk tolerance. Paying more for the actively-managed Roundhill Generative AI & Technology ETF makes sense if you want to see aggressive returns in exchange for higher risk.
The Technology Select Sector SPDR Fund is the route to go if you want to capture upside from the AI boom, but also want to limit your risk exposure through holdings such as Cisco, which has delivered dependable dividend increases spanning 18 consecutive years, but modest share price growth compared to AI semiconductor leader Nvidia.
Glossary
ETF (Exchange-Traded Fund): A fund traded on stock exchanges, holding a basket of assets like stocks or bonds.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges its investors.
Actively managed fund: A fund where managers select investments rather than tracking a fixed index.
Index: A benchmark representing a group of securities, used to measure market or sector performance.
Beta: A measure of a fund's volatility compared to the overall market (S&P 500).
AUM (Assets Under Management): The total market value of assets a fund manages on behalf of investors.
Max drawdown: The largest observed loss from a fund's peak value to its lowest point over a period.
Sector concentration: When a fund invests heavily in a specific industry or sector, increasing exposure to related risks.
ESG screen: A process that filters investments based on environmental, social, and governance criteria.
Liquidity: How easily an asset or fund can be bought or sold without affecting its price.
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Robert Izquierdo has positions in Alphabet, Apple, Broadcom, Cisco Systems, Microsoft, Nvidia, and Oracle. The Motley Fool has positions in and recommends Alphabet, Apple, Cisco Systems, Microsoft, Nvidia, and Oracle. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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