Is an AI or Broad Tech ETF the Better Bet? We Pit the Roundhill AI Fund Against the State Street S&P 500 Tech Fund

Comparing Roundhill Investments Generative AI & Technology ETF (NYSEMKT:CHAT) and State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) reveals a trade-off between the low-cost, established blue chip tech giants of XLK and the specialized, actively managed generative AI focus of CHAT.

Technology investors often choose between broad sector coverage and niche themes. The Roundhill fund (CHAT) targets the burgeoning generative AI space through active management. In contrast, the State Street fund (XLK) tracks the technology sector of the S&P 500, providing low-cost exposure to the industry's most established leaders and a deep liquidity pool for traders.

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 based on closing prices as of June 18, 2026.

Expense ratios diverge sharply, with the State Street fund appearing far more affordable at 0.08%. The Roundhill fund charges a premium 0.75% for its active management. Meanwhile, CHAT offers a higher payout with a 1.60% yield compared to 0.40% for XLK.

Performance & risk comparison

What's inside

The State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) focuses exclusively on the S&P 500 technology sector with 75 holdings. Its largest positions include Nvidia Corp (NASDAQ:NVDA) at 13.1%, Apple Inc (NASDAQ:AAPL) at 11.7%, and Microsoft Corp (NASDAQ:MSFT) at 8.7%. This fund launched in 1998 and has a trailing-12-month dividend of $0.76 per share. Its concentration reflects its passive index tracking of established software, semiconductor, and hardware companies that dominate the domestic market.

The Roundhill Investments Generative AI & Technology ETF (NYSEMKT:CHAT) manages 42 holdings and takes a broader approach across sectors, including Technology at 76.9%, Communication Services at 16.7%, and Consumer Cyclical at 5.9%. Its largest positions include SK Hynix Inc at 6.2%, Micron Technology (NASDAQ:MU) at 6.1%, and Nvidia at 5.8%. This actively managed fund launched in 2023 and paid $1.68 per share over the trailing 12 months, reflecting a strategy focused on identifying productivity drivers globally.

Which fund is the better buy?

The Roundhill Generative AI & Technology ETF has delivered a jaw-dropping 128% return over the past year. It is hard to ignore that return even when seeing the premium Roundhill charges, with an expense ratio of 0.75. Three-quarters of a percentage point is a steep fee for an ETF.

One argument against CHAT is that it’s still largely dominated by S&P 500 stocks — more than 40% of the fund is S&P 500 stocks. One argument for CHAT is that it holds well-established foreign-listed tech stocks that by definition won’t be in the S&P 500. It’s worth noting that the fund will tend to reflect the strength of the S&P 500 given its weighting in component stocks.

The State Street Technology Sector Select Sector SPDR ETF, meanwhile, looks pretty good as a standalone fund, with a one-year return near 50%. But in comparison to CHAT, it’s difficult to justify XLK as the better buy right now, given CHAT’s superior one-year performance and higher dividend yield. CHAT also beats XLK on 3-year performance, 52% to 31%. Perhaps worth noting is that until 14 months ago, XLK outperformed CHAT. There’s a risk, perhaps, in having missed the bulk of the run-up in AI stocks.

Still, any potential AI bubble will affect both funds. While it’s difficult to ever recommend a fund with a much higher expense ratio, if you’re looking to make a tech or AI investment in your portfolio, CHAT appears to be the better choice in 2026.

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

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Micron Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.