3 AI ETFs Underperforming the S&P 500 That Are Set to Surge 26% or More

Core Insights - The article discusses the performance and composition of several AI-focused exchange-traded funds (ETFs), highlighting their recent underperformance compared to the S&P 500 and their potential for recovery [5][15]. Fund Composition - The Ark Next Generation ETF has a significant focus on technology stocks, which make up 42% of its holdings, along with communication services (23%), consumer cyclical stocks (17.8%), and financial services (16.4%) [1]. - The iShares Future Exponential Technologies ETF has a heavy concentration of technology stocks (38.9%) and includes healthcare stocks (28.7%), with the top 10 holdings accounting for 33% of the fund's weight [9]. - The Roundhill Generative AI & Technology ETF has the highest weighting of technology stocks at 72.3%, with smaller allocations in communication services (20.1%) and consumer cyclical stocks (6%) [12]. Fund Performance - The Ark Next Generation ETF has a one-year return of 38.7%, while the Roundhill ETF has a return of nearly 50%, and the iShares ETF shows a one-year gain of 26.2% [3]. - Despite recent underperformance, these funds are expected to rebound, as their historical performance suggests that the current weakness is temporary [6][15]. Fund Management and Structure - The Ark Next Generation ETF, managed by Cathie Wood, has $2.1 billion in assets and an expense ratio of 0.76% [2]. - The iShares Future Exponential Technologies ETF, managed by BlackRock, has an expense ratio of 0.46% and was created in March 2015 [8]. - The Roundhill Generative AI & Technology ETF, launched in May 2023, has total assets of $1 billion and an expense ratio of 0.75% [11][14].