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].

Core Viewpoint - The tech sector is experiencing increased volatility, particularly in software stocks, and while risks of correction are present, major tech leaders are still considered long-term investments [1][2]. Group 1: Market Trends - The tech sector has faced significant fluctuations recently, with software stocks notably declining on the first trading day of the year [1]. - There is a possibility of a bear market or sharp declines, but the long-term potential of AI is highlighted as a reason to remain invested [2]. Group 2: Investment Opportunities - Two tech leadership ETFs are discussed as potential outperformers compared to the S&P 500, particularly if AI monetization is successful [3]. - The JPMorgan U.S. Tech Leaders ETF has seen a remarkable rise of over 77% since its inception in 2023, indicating strong performance [4]. - The ETF focuses on major players in the American tech sector and may benefit from stock-picking strategies in 2026 [5]. - The iShares Future Exponential Technologies ETF targets global innovation leaders, with over 70% of its investments in U.S. companies, making it suitable for investors seeking growth beyond traditional indices [8]. Group 3: ETF Characteristics - The JPMorgan U.S. Tech Leaders ETF has a net expense ratio of 0.65%, which is considered reasonable for active management [6]. - The ETF includes exposure to smaller firms with market caps under $120 billion, such as Robinhood Markets and Snowflake, providing a balanced portfolio [7]. - The iShares Future Exponential Technologies ETF has a modest expense ratio of 0.46% and maintains a balanced weighting, with no single holding exceeding 5% of the fund [9].