Roundhill Investments has launched a new exchange-traded fund, offering investors the opportunity to secure a diversified portfolio of stocks within the burgeoning generative artificial intelligence space.
What Happened: The launch of ChatGPT by OpenAI in late 2022 has taken the world by storm, with the chatbot seeing huge download numbers. The growth led to Microsoft Corporation MSFT investing $10 billion in OpenAI to help transform its search engine.
As investors seek avenues to capitalize on the growth of generative artificial intelligence, akin to companies like Microsoft, ETF firm Roundhill Investments might present an appealing solution.
Roundhill launched the Roundhill Generative AI & Technology ETF CHAT Thursday. The ETF group sees a total addressable market size of more than $120 billion for generative AI according to proprietary research.
The new ETF seeks to offer investors “exposure to companies at the forefront of artificial intelligence technology, with a focus on generative AI,” according to the company.
"Generative artificial intelligence (GAI) has the potential to become one of the most transformational technologies since the advent of the internet," Will Hershey, Co-Founder and CEO of Roundhill Investments, told Benzinga. He believes that GAI, in terms of its influence on productivity growth and profitability, is just at the beginning of its journey and positions it as a generational investment theme.
For the rapidly evolving AI sector, Hershey stressed on a discerning investment approach. "It's a very fast-moving space and we need to be relatively nimble," he explained. Rather than investing in companies merely following AI trends, Hershey's focus is on those developing foundational AI technologies.
Speaking to the potential of the AI sector, Hershey advocated for a collective approach through an ETF. Drawing parallels to megatrends like cloud computing, he stated, "There will likely be many winners from the generative AI boom. But when the technology is so nascent, many investors may prefer to bet on the theme overall rather than a single company."
Roundhill Investments Chief Strategy Officer Dave Mazza listed some of the industries that are likely to be impacted by GAI. “Generative AI represents the next frontier of artificial intelligence technology, offering the potential to revolutionize industries such as entertainment, healthcare, and more,” he said.
ChatGPT was the fastest application to reach 100 million users and has shown real-world use cases across a range of sectors.
“With CHAT, investors can gain exposure to this rapidly-evolving field, potentially benefiting from what we believe will be the exponential growth of generative AI technology,” Mazza added.
The new Roundhill Generative AI ETF is actively-managed and will hold companies that operated in the generative AI and related technologies fields.
Top holdings for the ETF include Microsoft Corporation, NVIDIA Corp NVDA, Alphabet Inc GOOGGOOGL, Baidu Inc BIDU, iFlytek, SenseTime Group SNTMF, Adobe Group ADBE, Advanced Micro Devices AMD, C3.AI AI, Tencent Group TCEHY and Salesforce.com Inc CRM.
Related Link: Is ChatGPT A Better Financial Advisor? We're Going To Find Out
Why It’s Important: Like other Roundhill ETFs, internationally traded companies like iFlytek and SenseTime can provide additional exposure to a sector outside the major U.S. exchanges.
“We had been hearing from investors for months that they were interested in investing in generative AI, but were frustrated by the lack of ETF options available to them,” Mazza said. “Roundhill is excited to be able to meet market demand with CHAT, an ETF comprised of the companies pioneering what we believe to be one of the fastest growing technologies in history.”
Roundhill is known for sector-specific ETFs.
The company recently launched the Roundhill Big Bank ETF BIGB, which holds six of the largest bank stocks.
Roundhill also launched the Roundhill Big Tech ETF BIGT, which holds the “FAAMG” stocks, offering investors increased exposure to a key acronym of high growth and closely followed technology stocks.
Roundhill is also behind key sports betting and metaverse-themed ETFs in the Roundhill Sports Betting & iGaming ETF BETZ and the Roundhill Ball Metaverse ETF METV respectively. The sports betting and metaverse-themed ETFs have $133 million and $442 million in assets under management, respectively.
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