Roundhill AI ETF Outperforms Fidelity Tech ETF in 1 Year, but What About the Long Term?

Technology investing often forces a choice between broad sector stability and niche growth themes. While Fidelity MSCI Information Technology Index ETF (NYSEMKT:FTEC) tracks a wide-ranging index of nearly 300 companies for a low fee, Roundhill Investments - Generative AI & Technology ETF (NYSEMKT:CHAT) focuses exclusively on the generative artificial intelligence (AI) boom.

This comparison looks at how these differing strategies impact total costs, risk, and portfolio concentration.

Snapshot (cost & size)

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.

Cost-conscious investors may find the Fidelity fund much more affordable, as it charges just 0.08% annually. However, the Roundhill fund offers a higher payout to its investors, with a trailing-12-month distribution yield of 2% compared to 0.35% for the Fidelity option.

Performance & risk comparison

What's inside

Roundhill Investments - Generative AI & Technology ETF is an actively managed fund that utilizes an environmental, social, and governance screen to select its 52 holdings. Launched in 2023, its largest positions include Nvidia at 7%, Alphabet at 6.6%, and Advanced Micro Devices at 5.8%. The fund has a trailing-12-month dividend of $1.68 per share and focuses on the technology, communication services, and consumer cyclical sectors. It also includes an ESG screen as a portfolio quirk. Over the last year, its share price has traded in a range of $39.92 to $87.40.

Fidelity MSCI Information Technology Index ETF tracks the MSCI USA IMI Information Technology 25/50 Index, offering much broader exposure with 286 holdings. Launched in 2013, its largest positions include Nvidia at 18.58%, Apple at 14.3%, and Microsoft at 9.9%. The fund has a trailing-12-month dividend of $0.95 per share and is almost exclusively concentrated in the technology sector. It has no specific investment quirks. Over the same period, its share price has traded in a range of $168.40 to $262.82.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

If you’re looking to increase your portfolio’s exposure to the tech sector but don’t want to follow specific companies or investing trends, an exchange-traded fund may be a good option for you. the CHAT and FTEC ETFs provide very different ways to play the space, with each presenting benefits and tradeoffs for interested investors.

CHAT goes big with a focus on artificial intelligence and an ESG investing twist, and posted a nearly 138% gain over the last year, trouncing FTEC’s respectable 60.5% return. But its active management also means it goes big on fees, charging 0.75% compared to FTEC’s more standard 0.08%. The newer fund also holds just 52 companies, which means industry challenges or company-specific headwinds are amplified. Indeed, despite its stronger overall result, CHAT also posted a greater max drawdown over the last two years. Finally, CHAT’s 2% dividend yield may be enticing for income investors, but know that the fund only distributes its dividend once a year, and 2025 was the first and only year it’s paid a dividend.

Given CHAT’s super-concentrated portfolio and high expense ratio, interested tech investors may be able to replicate its results by hand-selecting a few individual high-conviction artificial intelligence stocks. Those looking for a truly passive approach to tech investing may be better off with FTEC’s broader exposure and lower fees for a set-it-and-forget-it investing experience.

Sarah Sidlow has positions in Advanced Micro Devices, Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.