CHAT vs. FTEC: Is Concentrated AI Exposure or Broad Tech Diversification the Better Play Right Now?
Key Points
The Roundhill Generative AI & Technology ETF (CHAT) has significantly outperformed over the past year.
The Fidelity MSCI Information Technology Index ETF (FTEC) provides broader diversification, with more than five times as many holdings as CHAT.
CHAT shows higher volatility and deeper drawdowns, reflecting its aggressive focus on the generative AI subsector.
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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)
| Metric | FTEC | CHAT |
|---|---|---|
| Issuer | Fidelity | Roundhill Investments |
| Share price (as of Aug. 23, 2026) | $282.62 | $88.00 |
| Expense ratio | 0.08% | 0.75% |
| 1-yr return (as of Aug. 23, 2026) | 37% | 70% |
| Dividend yield | 0.37% | 1.8% |
| Beta (3Y) | 1.48 | 1.95 |
| AUM | $19.9 billion | $1.8 billion |
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
| Metric | FTEC | CHAT |
|---|---|---|
| Max drawdown (3 yr) | -27.3% | -31.3% |
| Growth of $1,000 over 3 years (total return) | $2,288 | $3,256 |
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.
For more guidance on ETF investing, check out the full guide at this link.
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.
FTEC has also experienced its fair share of turbulence, as it's also a tech-focused fund. However, because it covers the broader tech space and its largest holdings are industry-leading giants like Apple and Microsoft, investors can likely expect a smoother (albeit less lucrative) ride with this fund.
Both ETFs can be strong investments, but they each carry unique strengths. FTEC offers broader diversification and greater stability, while CHAT's hyper-focus on AI can yield more lucrative returns if the sector continues to thrive.
The right fund for you will depend on your risk tolerance and what you're looking to achieve with a tech ETF.
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Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Broadcom, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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