Market Watch: Thematic Tech ETFs Hold Potential Despite Rotation
Despite a recent shift away from megacap tech stocks, thematic tech exchange-traded funds (ETFs) may still present compelling investment opportunities. Roundhill Investments’ Generative AI & Technology ETF (CHAT) has gained 13.8% year-to-date as of Friday’s close. CEO Dave Mazza maintains that the fund’s investment thesis remains robust, even amid sector volatility.
“These names are still performing well,” Mazza told CNBC’s "ETF Edge." Despite a wobble in July and August, he noted, the ETF’s performance in the past month has been consistent with the broader market. CHAT achieved a 2.1% rise over the last month, slightly trailing the S&P 500’s 3.5% increase.
The ETF’s major holdings include industry giants Nvidia, Microsoft, and Alphabet, but it also features 52 investments in total, including under-the-radar AI players like Dell, ServiceNow, and Salesforce. Mazza dismisses concerns about the narrow scope of thematic ETFs, emphasizing their diverse integration of AI technologies.
Financial futurist Dave Nadig suggests these funds may be more suitable for traders than for long-term investors. “The average holding period on thematics is weeks, not years, so people use these as ways of expressing short-term opinions,” Nadig commented.
Nadig also highlighted the potentially higher fees of thematic funds. The actively managed CHAT ETF charges a management fee of 0.75%. However, he believes the premium might be justified due to the fast-paced nature of technology. “Having an active manager overlay on it makes a lot of sense,” Nadig added.
Mazza concurs, emphasizing that active management can be valuable for investors aiming to outperform. “For investors looking to either do more or have the potential to outperform—it’s worth paying up for credible active management,” he said. He also noted that many thematic ETFs are actually less expensive than traditional active management and mutual funds.
Disclaimer: Investing in ETFs, including thematic funds such as the Generative AI & Technology ETF (CHAT), involves risks, including the potential loss of principal. The performance of the ETF can fluctuate, and past results do not guarantee future performance. Investors should carefully consider their investment objectives, risks, charges, and expenses before investing. This information is provided for educational purposes and is not intended to serve as specific investment advice. Please consult with a financial advisor to understand your specific investment needs and circumstances.
Original Story https://www.cnbc.com/2024/09/14/thematic-tech-etf-investing-may-have-selective-use-case-experts-say.html
Category :
Tags:
