Artificial intelligence and robotics remain among the most popular investment themes on the market, and for good reason: the infrastructure buildout shows no signs of slowing. The problem is that many investors approach these themes the wrong way. Rather than trying to identify the next moonshot startup before everyone else, thematic ETFs offer a more structured entry point.
That said, thematic ETFs are not a cure-all. Many charge steep fees, launch near the peak of a hype cycle, and end up holding little more than an expensive basket of the same technology stocks available through any broad market index fund. The category rewards selectivity. A handful of AI-focused ETFs have proven to be reasonably constructed, and if the goal is to allocate $10,000 toward the theme today, two funds stand out: one low-cost passive option and one actively managed fund.
Xtrackers Artificial Intelligence and Big Data ETF
The first is the Xtrackers Artificial Intelligence and Big Data ETF (NASDAQ:XAIX). Unlike many thematic funds that screen companies based solely on current AI-related revenue, XAIX attempts to identify firms actively developing AI technologies, tracking the Nasdaq Global Artificial Intelligence and Big Data Index. The process starts with a universe of more than 1,700 companies, then applies a proprietary patent-based screening method to identify businesses engaged in deep learning, natural language processing, image and speech recognition, cloud infrastructure, cybersecurity, and big data analytics.
Each company receives an intensity score reflecting how extensively it participates in those fields. The goal is to capture firms with meaningful research and development activity, not just companies riding the current wave of AI enthusiasm. That distinction matters: it helps the fund avoid loading up on names whose AI exposure is superficial or secondhand.
What makes XAIX attractive from a cost standpoint is its 0.35% expense ratio, which is well below the thematic ETF average of roughly 0.60% to 0.75%. On a $10,000 investment, that translates to about $35 per year in fee drag, a modest hurdle relative to what more expensive peers charge. The fund delivered a one-year return of approximately 27% in its most recent trailing period, reflecting strong participation in the AI rally.
There is one caveat worth flagging. The U.S.-listed XAIX share class holds roughly $110 million to $123 million in assets, making it a relatively small fund. Small thematic ETFs face a real risk of closure if they fail to attract enough investor capital, and it is not unusual for underfunded thematic products to be wound down. Investors comfortable with that risk may find the patent-driven methodology and low costs compelling. Those who prefer the added stability of a larger fund may want to weigh that tradeoff carefully.
Roundhill Generative AI & Technology ETF
For investors willing to pay more for active management, the Roundhill Generative AI & Technology ETF (NYSEARCA:CHAT) takes a very different approach. CHAT carries a 0.75% expense ratio, more than double the cost of XAIX, but the fund has built a track record that justifies closer consideration. In 2025, CHAT gained approximately 45%, outpacing the S&P 500’s 17% advance and the Nasdaq-100’s 21% rise. In April 2026 alone, the fund returned 27.2%, earning the top performance grade in its technology category.
CHAT selects stocks through a proprietary methodology that blends a transcript score and a sector score to evaluate each company’s relevance to generative AI, accounting for market cap, liquidity, revenue, profitability, and R&D investment. The result is a concentrated portfolio tilted heavily toward the companies currently driving AI adoption and infrastructure spending. Investors should expect substantial exposure to Magnificent Seven names alongside other firms embedded in the AI ecosystem.
The fund also runs a high portfolio turnover rate of around 92% annually, which reflects its active reallocation in response to shifting market dynamics. When hyperscaler capital expenditure ramps up or a chipmaker releases a breakthrough product, the fund can quickly reprice those positions. That agility has been an advantage during periods of rapid AI sector rotation, though it also generates more taxable events than a passive alternative would.
The concentrated nature of the portfolio is a legitimate double-edged factor. When AI leadership stays narrow and is dominated by a handful of companies, CHAT can outperform by a wide margin. If leadership broadens or sentiment shifts, that same concentration amplifies downside volatility. Investors going in should be comfortable with meaningful short-term swings.
The Bottom Line
Building a $10,000 AI allocation today could reasonably start with XAIX as the core position. Its patent-driven methodology, broader diversification across roughly 90 to 120 holdings, and lower fee structure make it an appealing long-term holding for investors who want measured exposure without paying active-management rates. The fund’s small AUM is the key risk to monitor.
CHAT is the higher-conviction alternative. The higher fee is the price of admission to active management and a concentrated portfolio designed to capture the companies most directly tied to the generative AI buildout. Its 2025 return of about 45% demonstrates what that positioning can deliver when the trade works. Neither ETF guarantees outperformance, but both offer a more disciplined framework than picking individual AI stocks in hopes of landing the next big winner.
Editor’s note: This article was updated to include CHAT’s 2025 full-year return of approximately 45% (versus the S&P 500’s 17% and Nasdaq-100’s 21%), CHAT’s April 2026 monthly return of 27.2%, XAIX’s approximate one-year return of 27%, the fund’s roughly $110 million to $123 million in U.S.-listed assets under management, and its approximately 90 to 120 holdings range.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks