Which Is the Better Artificial Intelligence (AI) ETF, Roundhill's CHAT or State Street's XLK?
Key Points
The State Street Technology Select Sector SPDR ETF has a lower expense ratio and higher assets under management than the Roundhill Investments Generative AI & Technology ETF.
The Roundhill Investments Generative AI & Technology ETF offers a higher trailing-12-month dividend payout but exhibits greater price volatility relative to the broader market.
The Roundhill Investments Generative AI & Technology ETF provides actively managed exposure to generative AI companies, while the State Street Technology Select Sector SPDR ETF tracks a passive index of technology companies within the S&P 500.
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Comparing the Roundhill Investments Generative AI & Technology ETF (NYSEMKT:CHAT) and State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) involves weighing the high-growth potential of niche generative artificial intelligence stocks against established technology giants at a lower cost.
Investors seeking technology exposure often choose between broad sector plays and targeted thematic funds. CHAT offers an actively managed approach to the emerging generative artificial intelligence space, while XLK provides passive exposure to the largest technology companies within the S&P 500. This comparison highlights their divergent strategies and risk profiles.
Snapshot (cost & size)
| Metric | CHAT | XLK |
|---|---|---|
| Issuer | Roundhill Investments | State Street |
| Expense ratio | 0.75% | 0.08% |
| One-year return (as of June 3, 2026) | 133.73% | 64.07% |
| Dividend yield | 1.72% | 0.40% |
| Beta | 1.83 | 1.33 |
| AUM | ~$2.1 billion | ~$124.5 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The One-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Cost-conscious investors may prefer the State Street fund, which features a notably lower expense ratio. However, the Roundhill fund offers a higher payout, having distributed $1.68 per share over the trailing 12 months compared to $0.76 for its peer, representing a 1.32 percentage point yield gap.
Performance & risk comparison
| Metric | CHAT | XLK |
|---|---|---|
| Max drawdown (3 yr) | (31.30%) | (25.70%) |
| Growth of $1,000 over 3 years (total return) | $3,760 | $2,401 |
What's inside
The State Street Technology Select Sector SPDR ETF provides targeted exposure to companies within the Technology Select Sector Index. This passive strategy focuses entirely on the technology sector of the S&P 500, including companies in software, hardware, and semiconductor industries. Its largest positions include Nvidia (NASDAQ:NVDA) at 13.30%, Apple (NASDAQ:AAPL) at 11.37%, and Microsoft (NASDAQ:MSFT) at 8.05%. Launched in 1998, it has a trailing-12-month dividend of $0.76 per share and holds 72 positions, with its last ex-dividend date occurring on March 23, 2026.
In comparison, the Roundhill Investments Generative AI & Technology ETF is an actively managed fund that targets the generative artificial intelligence industry. It incorporates an Environmental, Social, and Governance (ESG) screen and maintains 52 holdings across technology (77%), communication services (17%), and consumer cyclicals (6%). Its top holdings include Nvidia at 5.98%, Alphabet (NASDAQ:GOOGL) at 5.73%, and Micron Technology (NASDAQ:MU) at 5.70%. Launched in 2023, it has a trailing-12-month dividend of $1.68 per share and aims to capture productivity growth driven by AI innovation.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Both the State Street Technology Select Sector SPDR ETF (XLK) and Roundhill Investments Generative AI & Technology ETF (CHAT) offer an efficient way to invest in the hot field of artificial intelligence. Their holdings include prominent AI stocks, such as Nvidia, but they have vastly different approaches that can affect your decision in choosing between them.
CHAT focuses exclusively on companies impacting the generative AI sector. This has led to a finite set of stocks in the fund, but because the AI industry is growing fast, these holdings have delivered outstanding performance, as demonstrated by CHAT’s one-year return. This ETF’s expense ratio is high because it is an actively-managed fund, which is an advantage considering how quickly the AI market is evolving.
XLK targets technology stocks within the S&P 500, and as a result, casts a wider net than CHAT in terms of its holdings, as illustrated by Apple, which is not known as an generative AI stock. Even so, XLK contains key AI companies, including Micron and Microsoft. The advantage with this strategy is that the fund isn’t entirely reliant on the AI sector, making it less volatile than CHAT. This is seen in its lower beta and max drawdown.
For investors willing to take on more risk for the substantial potential of outsized gains from AI stocks, CHAT is for you. XLK is for those who seek a more conservative, lower-risk ETF to capture the AI boom.
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Robert Izquierdo has positions in Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Apple, Micron Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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