Roundhill Investments launched the Roundhill Generative AI & Technology ETF (NYSE Arca: CHAT), which begins trading today on the NYSE Arca. The actively managed ETF targets global companies at the forefront of artificial intelligence technology, with a focus on generative AI. This includes companies that either pave the way for AI’s growth or directly create the tools that bring this technology to market.
Roundhill’s chief strategy officer Dave Mazza told VettaFi that while “AI has been in the vernacular for some time… there hasn’t been an ETF that offers precise exposure to companies that really focus on generative AI.”
At launch, the fund’s top holdings include Nvidia (NVDA) (weighted at 7.8%), Microsoft (MSFT) (7.6%), and Alphabet (GOOGL) (7.2%). While there are currently 29 securities in the fund, Mazza expects that basket to grow “as more companies get involved.”
“We’re going to be extremely selective. We don’t want to have watered down exposure,” Mazza added: “When there’s a significant amount of buzz on a topic, a lot of companies say they’re involved, but aren’t.”
See more: “Roundhill Offers Exposure to FAAMG Stocks With BIGT”
The Real-World Impact of Generative AI
Generative AI uses neural networks to generate new data that is similar in structure and format to existing data. It can create entirely new data through algorithms that learn to recognize patterns and relationships within large datasets. As a result, the AI system can generate new content or ideas that are similar in style or format.
And generative AI is already making a significant real-world impact. OpenAI’s ChatGPT has become the fastest application ever to reach 100 million users. Its customers are already integrating its technology into their everyday lives for uses ranging from creative writing to coding software.
Roundhill’s research indicates that generative AI could surpass $120 billion of enterprise software sales in 10 years. For context, the global software market generated $800 billion in revenue in 2022. Meanwhile, research from Goldman Sachs suggests that artificial intelligence could drive $7 trillion in global economic growth over the next seven years.
“This is a gap in the marketplace,” Mazza said. “Other funds have AI in the name. But they’re not focused on the transformative nature of generative AI or conversational AI.”
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