CHAT ETF: 10 Things to Know as the New AI Stocks Fund Starts Trading


  • The Tidal Trust II Roundhill Generative AI & Technology ETF (NYSEARCA:CHAT) has officially begun trading today.
  • This ETF tracks an index of companies that are heavily involved in the generative AI space.
  • While weighted heavily toward a few names, investors get broad-based exposure to this trend at an expense ratio of 0.75%.
CHAT ETF - CHAT ETF: 10 Things to Know as the New AI Stocks Fund Starts Trading

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Today happens to be the first day of trading for an exciting new exchange-traded fund (ETF). Shares of the Tidal Trust II Roundhill Generative AI & Technology ETF (NYSEARCA:CHAT) are now trading and generating significant buzz. Currently, the CHAT ETF is up on the day and has seen some positive momentum build throughout the afternoon. This comes as many investors seek ways to invest in this burgeoning trend.

Of course, ETFs provide investors with a diversified basket of stocks in a given market or sector. In the case of the CHAT ETF, this fund’s holdings are relatively top-heavy, with the top five positions in the portfolio accounting for one-third of the overall ETF. These holdings, in order of weighting, are Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG), Baidu (NASDAQ:BIDU) and iFLYTEK.

Let’s dive into this ETF and what investors may want to consider with respect to this fund versus picking individual stocks.

Is the CHAT ETF Worth a Buy?

Like all ETFs, the value investors gain by investing in such funds is broad-based diversification. Of course, this diversification comes at a cost, but often at a much lower cost (when one factors in time) than an individual investor building their own portfolio of such stocks. In this case, the CHAT ETF’s expense ratio comes in at 0.75%, which is a bit pricey relative to other index funds.

Another factor to consider is that this ETF appears to be very top-heavy, with investor returns pegged to the performance of a handful of stocks. While one might suggest that most index funds carry the same weighting risks (and they do), this is a consideration investors need to make when thinking about investing in such a fund.

Of course, for those looking broadly at generative AI and technology stocks as the future, such an ETF might fit one’s portfolio well. This fund appears to be an excellent way to diversify into such a trend, and I think the weightings accurately reflect some of the best names in this space. Thus, for many passive investors, this may be the way to go.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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