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AI ETFs: Low Fees or High Conviction?
28 Sep
Summary
- Two AI ETFs offer distinct approaches: low-cost passive vs. active management.
- XAIX focuses on AI development via patents with lower fees.
- CHAT targets generative AI leaders with a concentrated portfolio and higher fees.
The artificial intelligence and robotics sectors continue to present strong investment opportunities, with thematic ETFs offering a structured entry point. As of 2026, the market features 393 thematic ETFs managing over $256 billion, highlighting intense competition.
Xtrackers Artificial Intelligence and Big Data ETF (XAIX) provides a low-cost passive approach, charging a 0.35% expense ratio. It identifies companies actively developing AI through a patent-based screening of over 1,700 firms, focusing on deep learning, NLP, and big data. XAIX holds approximately 93 positions but carries a risk due to its modest $110 million to $165 million in assets under management.
Alternatively, the Roundhill Generative AI & Technology ETF (CHAT) adopts an active management strategy with a 0.75% expense ratio. It utilizes a proprietary methodology to select about 42 to 46 concentrated holdings, primarily Magnificent Seven companies and others driving generative AI. CHAT has grown significantly, exceeding $1 billion in assets, reducing closure risk and demonstrating institutional adoption.
