Why Active Matters for CHAT & AI Investing

The Resiliency of the AI Trade

Despite unresolved macro risks, the Roundhill Generative AI & Technology ETF (CHAT) is trading at all-time highs, as the AI trade shows continued resilience.

From the market’s April 8 low through June 24, CHAT has surged over 55% on a price return basis, outperforming the Nasdaq 100 by over 25% and S&P 500 by over 30%.* Among its peers within the Morningstar Technology category of 286 funds, CHAT ranks in the second percentile for fund performance over the past three months.** In addition, CHAT’s a top quartile performer YTD and over the last year.

*You cannot invest in an index. The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than the performance data quoted. The investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than their original cost. Returns less than one year are not annualized. For the most recent month-end performance, please call (855) 561-5728. For more information, including current holdings and standardized performance: https://www.roundhillinvestments.com/etf/chat/

**Source: Morningstar. Performance table can be found here. Based on USD | All data based off of NAV except where noted | Investment (Price) as of Jun 24, 2025 | Investment (NAV) as of Jun 24, 2025 | Category: Technology as of Jun 24, 2025 | Index: Morningstar US Tech TR USD as of Jun 24, 2025. 

What factors have helped propel Generative AI stocks higher over the past few months?

AI Previously at a Discount

Valuation has been a supportive aspect of the AI trade in 2025. Relative to the tech-heavy Nasdaq 100 index, the Roundhill Generative AI & Technology ETF traded at a valuation discount the past four months. The median next-twelve-month (NTM) price/earnings (P/E) ratio of CHAT’s constituents now sits at 27.3x, just above the median NTM P/E for Nasdaq 100 constituents at 27.1x. Despite trading slightly above parity with the Nasdaq 100, investors could still see this as an opportunity given recent valuation levels in early 2024.

Buoyant Earnings Estimates

Generative AI companies continue to demonstrate strong earnings momentum. 88% of CHAT’s constituents have delivered positive year-over-year growth in next-twelve-month (NTM) earnings estimates as demand grows for AI solutions. This strength in earnings revisions supports the case that AI is more than just a buzzword — it's an industry-agnostic tool for optimizing business models and driving real bottom-line impact.

While valuation and earnings estimates have been potent tailwinds to the strong three-month stretch for CHAT, we believe it doesn’t explain everything. Since its inception in 2023, the fund’s active management has positioned it from a place of strength, enabling investors to capitalize on both price dislocations and emerging growth opportunities. When the facts change and the AI landscape evolves, so does CHAT. 

Why Active in Generative AI?

Most AI ETFs offered in the market today are passively managed, meaning that their investment objective is to track the performance of an index. In our view, active management within the AI ETF space is critical. CHAT’s active management approach enables the fund to adapt in real time to the rapidly evolving AI landscape — adjusting exposure to leaders and laggards, capturing emerging growth opportunities without being constrained by fixed rebalancing schedules.

How CHAT Has Benefitted From Active

Many thematic indexes cap weights on dominant names, which can dilute exposure to the engines of growth. We size holdings by conviction and risk, not by an arbitrary ceiling. Digging into the core holdings and alpha generators of CHAT can help to illustrate this point.

• Nimble active management enabled the investment committee to allocate early to Coreweave Inc (CRWV), a pure AI play that debuted in March 2025. Since its addition to the portfolio, CRWV has accounted for 42.5% of CHAT’s YTD performance through 6/24/25.
•  While Apple (AAPL) has featured as a consistent holding in CHAT for its trading history, the company has struggled to bear immediate fruit with its AI investments. The Investment Committee’s decision to underweight its allocation to AAPL relative to passive index allocations like in the Nasdaq 100 has been an asset for the fund.
• While considered a leader in the AI space, Palantir Technologies (PLTR) is a smaller weight in most technology indexes due to its market capitalization. Within CHAT, PLTR is a top five holding. Over the past year, PLTR accounts for roughly 20% for the fund’s returns.
• While Nvidia’s impact on the AI revolution cannot be overstated, we believe its weight in the portfolio should be managed. While NVDA is CHAT’s largest holding, its underweight allocation relative to passive indexes like the S&P 500 and Nasdaq 100 has been a positive for the fund.

Agility, Conviction, & Early Access

In our view, the actively managed investment approach to the AI space through the Roundhill Generative AI & Technology ETF gives investors the opportunity to exploit short-term tailwinds while gaining exposure to long-term secular growth. AI is a rapidly evolving space that is in a constant state of disruption and technological breakthroughs, requiring a dynamic, nimble approach. We believe CHAT is up for the challenge, providing investors with real-time agility, conviction position sizing, and early access to new AI entrants.

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than the performance data quoted. The investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than their original cost. Returns less than one year are not annualized. For the most recent month-end performance, please call (855) 561-5728. For more information, including current holdings and standardized performance: https://www.roundhillinvestments.com/etf/chat/

Glossary: 

The price-to-earnings (P/E) ratio measures a company's share price relative to its earnings per share (EPS). Next Twelve Months refers to the forward twelve-month estimate period.

Investors should consider the investment objectives, risk, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about Roundhill ETFs please call 1-855-561-5728 or visit the website at www.roundhillinvestments.com/etf/. Read the prospectus or summary prospectus carefully before investing.

Artificial Intelligence Company Risk. Companies involved in, or exposed to, artificial intelligence related businesses may have limited product lines, markets, financial resources or personnel. These companies face intense competition and potentially rapid product obsolescence, and many depend significantly on retaining and growing the consumer base of their respective products and services.

Technology Sector Risk. The Fund will invest substantially in companies in the information technology sector, and therefore the performance of the Fund could be negatively impacted by events affecting this sector. Market or economic factors impacting technology companies and companies that rely heavily on technological advances could have a significant effect on the value of the Fund’s investments. The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation and competition, both domestically and internationally, including competition from foreign competitors with lower production costs.

New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions. Small-Capitalization Investing. The securities of small-capitalization companies may be more vulnerable to adverse issuer, market, political, or economic developments than securities of large- or mid-capitalization companies. The securities of small capitalization companies generally trade in lower volumes and are subject to greater and more unpredictable price changes than large- or mid-capitalization stocks or the stock market as a whole.

Micro-Capitalization Investing. Micro-capitalization companies often have limited product lines, narrower markets for their goods and/or services and more limited managerial and financial resources than larger, more established companies, including companies which are considered small- or mid-capitalization.

Concentration Risk. The Fund will be concentrated in securities of issuers having their principal business activities in the technology group of industries. To the extent that the Fund concentrates in a group of industries, it will be subject to the risk that economic, political, or other conditions that have a negative effect on that group of industries will negatively impact them to a greater extent than if its assets were invested in a wider variety of industries.

CHAT is distributed by Foreside Fund Services, LLC.

ARTY Disclosures

Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses, which may be obtained by visiting the iShares Fund and BlackRock Fund prospectus pages. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal.

If the Fund invests in any underlying fund, certain portfolio information, including sustainability characteristics and business-involvement metrics, provided for the Fund may include information (on a look-through basis) of such underlying fund, to the extent available.

International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/developing markets or in concentrations of single countries.

Funds that concentrate investments in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes and the general securities market.

AI technology relies on large data sets, which can lead to inaccuracies. Companies in AI face competition, rapid obsolescence, and depend on demand from various industries. Regulatory scrutiny could limit AI development, with data collection facing closer examination and potential fines. Country-specific regulations could also impact AI and big data companies.

Technologies perceived to displace older technologies or create new markets may not in fact do so. Companies that initially develop a novel technology may not be able to capitalize on the technology.

Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the fund. Any applicable brokerage commissions will reduce returns. Beginning August 10, 2020, market price returns for BlackRock and iShares ETFs are calculated using the closing price and account for distributions from the fund. Prior to August 10, 2020, market price returns for BlackRock and iShares ETFs were calculated using the midpoint price and accounted for distributions from the fund. The midpoint is the average of the bid/ask prices at 4:00 PM ET (when NAV is normally determined for most ETFs). The returns shown do not represent the returns you would receive if you traded shares at other times.

Index returns are for illustrative purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

Certain sectors and markets perform exceptionally well based on current market conditions and iShares and BlackRock Funds can benefit from that performance. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such results will be repeated.

Distribution Yield and 12m Trailing Yield results may have period over period volatility due to factors including tax considerations such as treatment of passive foreign investment companies (PFICs), treatment of defaulted bonds or excise tax requirements; exceptional corporate actions; seasonality of dividends from underlying holdings; significant fluctuations in fund shares outstanding; or fund capital gain distributions.

The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

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The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Bloomberg, BlackRock Index Services, LLC, Cboe Global Indices, LLC, Cohen & Steers, European Public Real Estate Association (“EPRA® ”), FTSE International Limited (“FTSE”), ICE Data Indices, LLC, NSE Indices Ltd, JPMorgan, JPX Group, London Stock Exchange Group (“LSEG”), MSCI Inc., Markit Indices Limited, Morningstar, Inc., Nasdaq, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), Nikkei, Inc., Russell, S&P Dow Jones Indices LLC or STOXX Ltd. None of these companies make any representation regarding the advisability of investing in the Funds. With the exception of BlackRock Index Services, LLC, who is an affiliate, BlackRock Investments, LLC is not affiliated with the companies listed above.

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Review the MSCI methodology behind the Sustainability Characteristics and Business Involvement metrics: 1ESG Fund Ratings; 2Index Carbon Footprint Metrics; 3Business Involvement Screening Research; 4ESG Screened Index Methodology; 5ESG Controversies; 6MSCI Implied Temperature Rise

For funds with an investment objective that include the integration of ESG criteria, there may be corporate actions or other situations that may cause the fund or index to passively hold securities that may not comply with ESG criteria. Please refer to the fund’s prospectus for more information. The screening applied by the fund's index provider may include revenue thresholds set by the index provider. The information displayed on this website may not include all of the screens that apply to the relevant index or the relevant fund. These screens are described in more detail in the fund’s prospectus, other fund documents, and the relevant index methodology document.

Certain information contained herein (the “Information”) has been provided by MSCI ESG Research LLC, a RIA under the Investment Advisers Act of 1940, and may include data from its affiliates (including MSCI Inc. and its subsidiaries (“MSCI”)), or third party suppliers (each an “Information Provider”), and it may not be reproduced or redisseminated in whole or in part without prior written permission. The Information has not been submitted to, nor received approval from, the US SEC or any other regulatory body. The Information may not be used to create any derivative works, or in connection with, nor does it constitute, an offer to buy or sell, or a promotion or recommendation of, any security, financial instrument or product or trading strategy, nor should it be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. Some funds may be based on or linked to MSCI indexes, and MSCI may be compensated based on the fund’s assets under management or other measures. MSCI has established an information barrier between equity index research and certain Information. None of the Information in and of itself can be used to determine which securities to buy or sell or when to buy or sell them. The Information is provided “as is” and the user of the Information assumes the entire risk of any use it may make or permit to be made of the Information. Neither MSCI ESG Research nor any Information Party makes any representations or express or implied warranties (which are expressly disclaimed), nor shall they incur liability for any errors or omissions in the Information, or for any damages related thereto. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited.

AIQ Disclosures

Investing involves risk, including the possible loss of principal. The investable universe of companies in which AIQ may invest may be limited. The companies in which the Fund invests may be subject to rapid changes in technology, intense competition, rapid obsolescence of products and services, loss of intellectual property protections, evolving industry standards and frequent new product productions, and changes in business cycles and government regulation.

International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume.

Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Beginning October 15, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to October 15, 2020, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time. The returns shown do not represent the returns you would receive if you traded shares at other times. Indices are unmanaged and do not include the effect of fees, expenses or sales charges. One cannot invest directly in an index.
Since the Fund’s shares did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in Shares, the NAV of the Fund is used to calculate market returns.

Carefully consider the Fund’s investment objectives, risks, and charges and expenses. This and other information can be found in the Fund’s summary or full prospectuses. Please read the prospectus carefully before investing.

Global X Management Company LLC serves as an advisor to Global X Funds. The Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Global X Management Company LLC or Mirae Asset Global Investments. Global X Funds are not sponsored, endorsed, issued, sold or promoted by Indxx, nor does Indxx make any representations regarding the advisability of investing in the Global X Funds. Neither SIDCO, Global X nor Mirae Asset Global Investments are affiliated with Indxx.

IGPT Disclosures

Typically, security classifications used in calculating allocation tables are as of the last trading day of the previous month.
There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. The Fund’s return may not match the return of the Underlying Index. The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund.

Investments focused in a particular industry, such as the software and semiconductors, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments. 

The Fund invests in AI technology companies, which are sensitive to specific risks such as small markets, business cycle changes, economic growth, technological progress, obsolescence, and regulation. These companies may have limited products, markets, resources, or personnel, making their securities more volatile, especially for smaller start-ups. Rapid technological changes can adversely affect their results. AI companies often rely on patents, copyrights, trademarks, and trade secrets to protect their technology, but there is no guarantee these protections will be sufficient. Significant R&D spending does not ensure product or service success.

The Fund may engage in frequent trading of its portfolio securities in connection with the rebalancing or adjustment of the Underlying Index.

Stocks of small and mid-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.

The Fund is non-diversified and may experience greater volatility than a more diversified investment.

The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.

The S&P Composite 1500® Software & Services (S&P Software & Services) Index consists of all software and services stocks included in the S&P Composite 1500® Index.

The Dynamic Software Intellidex Index is comprised of common stocks of 30 US software companies. 

The Global Industry Classification Standard was developed by and is the exclusive property and a service mark of MSCI, Inc. and Standard & Poor's.

The STOXX World AC NexGen Software Development Index is the intellectual property (including registered trademarks) of STOXX Ltd., Zug, Switzerland (“STOXX”), Deutsche Börse Group or their licensors, which is used under license. Invesco AI and Next Gen Software ETF is neither sponsored nor promoted, distributed or in any other manner supported by STOXX, Deutsche Börse Group or their licensors, research partners or data providers and STOXX, Deutsche Börse Group and their licensors, research partners or data providers do not give any warranty, and exclude any liability (whether in negligence or otherwise) with respect thereto generally or specifically in relation to any errors, omissions or interruptions in the STOXX World AC NexGen Software Development Index or its data.

Beta is a measure of risk representing how a security is expected to respond to general market movements. Smart Beta represents an alternative and selection index based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk.