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Buying an exchange-traded fund (ETF) that tracks a diversified index like the S&P 500 is one of the surest ways to build wealth in the stock market over the long term. It's a strategy every investor should consider, no matter their age.
However, young investors in their 20s have time on their side, so they might be comfortable with a little more volatility in exchange for the opportunity to earn even higher returns. Having more exposure to companies developing revolutionary technologies like artificial intelligence (AI) could supercharge their portfolio over the long term.
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The Roundhill Generative AI and Technology ETF (NYSEMKT: CHAT) exclusively invests in the world's top AI stocks. It's down 35% from its June all-time high (as of the market close on Nov. 6), and if I were in my 20s today, here's why I'd take this opportunity to add it to my diversified portfolio.
The Roundhill Generative AI and Technology ETF is actively managed, which means rather than simply tracking an index, a team of professional portfolio managers regularly buy and sell stocks based on what they believe will produce the best returns. But they adhere to a criteria, investing only in companies developing the hardware infrastructure, software, and platforms powering the AI revolution.
The Roundhill ETF currently holds just 36 stocks, and it's quite top-heavy, because its five largest positions represent 31.5% of the value of its entire portfolio.
2. Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL)
Data source: Roundhill Investments. Portfolio weightings are accurate as of Nov. 8, 2026, and are subject to change.
Nvidia is the world's largest semiconductor company. Its graphics processing units (GPUs) for the data center are the best chips in the industry for processing AI workloads, and it continues to experience more demand than it can supply. In fact, chief executive Jensen Huang says every frontier AI model company plans to adopt the new Vera Rubin GPU systems.
Alphabet, Microsoft, and Amazon operate the three largest cloud computing platforms in the world, where they give enterprise customers access to data center capacity, ready-made foundation models, and other tools that are essential for deploying AI software. Each of these companies also developed its own AI assistant, which it integrated into legacy software systems to unlock new revenue streams.
Meta Platforms is the parent company of the Facebook, Instagram, and WhatsApp social media applications. However, it launched a personal AI assistant called Muse in September which already has over 10 million users. It can do everything from managing the user's emails to handling their shopping, so it could significantly expand Meta's addressable market beyond social media.
Some of the other AI powerhouses in the Roundhill ETF include Advanced Micro Devices, Micron Technology, CrowdStrike, and Elon Musk's Space Exploration Technologies.
The Roundhill Generative AI and Technology ETF was established in May 2023, so it doesn't have a very long track record. However, even after losing one-third of its value over the last few months, the ETF has still returned 160% since its inception, more than twice the 75% return of the S&P 500 over the same period.
I think it will trend higher over the long term because the AI boom is still in its infancy. While chips and data centers are the primary drivers of value right now, technologies like robotics and autonomous vehicles could be orders of magnitude larger in the future. But given its highly concentrated exposure to the AI industry alone, investors shouldn't bet the farm on the Roundhill ETF.
Had an investor parked $20,000 in an S&P 500 index fund in May 2023, they would have roughly $35,000 today. But had they put 70% of that money in the S&P and the other 30% in the Roundhill ETF, they would be sitting on $40,100 today instead. That demonstrates how an investor can use the ETF alongside a traditional index fund to supercharge their returns.
But remember, that strategy will come with added volatility. Not every investor would be comfortable with seeing a particular asset decline by 35% in just a few months, so while I would buy this ETF with the intention of holding it forever if I were in my 20s, it certainly isn't for everyone.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, CrowdStrike, Meta Platforms, Micron Technology, Microsoft, Nvidia, and Space Exploration Technologies. The Motley Fool has a disclosure policy.
If I Were in My 20s, I'd Buy This AI ETF After Its Recent Crash and Hold It Forever was originally published by The Motley Fool
