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Roundhill Investments has launched a new exchange-traded fund (ETF) focused on the burgeoning generative AI sector.


Background info

Roundhill is a registered investment adviser and ETF issuer offering thematic and sector-specific funds.

This latest fund, trading under the ticker symbol ‘CHAT’ on the NYSE Arca, consists of holdings in 30 AI- and technology-focused companies.

Those companies are selected across different classifications, including AI platforms (companies developing their own generative AI models and tools), as well as infrastructure providers which supply hardware specifically tailored to AI workflows.

The fund also includes both enterprise and consumer software suppliers, which are building and commercialising generative AI applications for their customers.

What’s in the fund?

Roundhill said the fund is the first ETF globally designed to track the performance of companies involved in generative AI.

The fund’s largest holding is in Nvidia Corporation, a technology supplier which describes itself as the “world leader in artificial intelligence computing”.

The second and third largest holdings in the ETF are Microsoft and Alphabet (which owns Google), followed by processor specialist AMD and software giant Adobe.

Other well-known holdings include Meta, Amazon, Tencent and Snap, as well as Shutterstock, Intel, Salesforce and Alibaba.

The fund also includes several less broadly known tech companies, including “pure play AI companies,” such as the long standing Chinese IT firm iFlyTek, enterprise AI software supplier C3ai and Hong Kong-based AI developer Sensetime.

Why invest in AI?

Roundhill suggested that the total addressable market (TAM) for generative AI enterprise software is estimated at around $121bn.

Goldman Sachs, meanwhile, estimates that AI has the potential to drive some $7tn in global economic growth over the next decade.

OpenAI’s ChatGPT has helped push the conversation around AI technology into the mainstream in recent months, with the service reaching 100 million users in just two months after launching, making it one of the fastest ever applications to reach the milestone.

The CHAT ETF joins several others in Roundhill’s wheelhouse, including the sports betting-focused fund BETZ, which holds shares in more than 40 publicly traded sports betting and iGaming businesses including DraftKings, Flutter and Evolution.

In March, Roundhill also launched its BIGB banking ETF, which consists of just six “too big to fail” US bank stocks.

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