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December brings us the AOT Software Platform ETF (AOTS), and the timing is perfect. This is AOT's second attempt at a software platform fund, after their first try (2x leveraged SOFL) launched in July, failed to gather assets, and closed in October after three glorious months.
Most sponsors would take the hint. AOT looked at their 1.29% leveraged product getting rejected and thought: “Let me try again without the leverage.” This is the financial equivalent of asking someone out, getting turned down, then immediately asking again but promising to be less intense.
I respect it.
The Thesis Hasn't Changed
Software platforms are infrastructure powering the digital economy and AI revolution. Companies creating, relying on, or contributing to these platforms. Companies deriving 50%+ revenue from platform activities. The picks and shovels for the AI gold rush.
It's sound. We're in an unprecedented AI buildout requiring massive software infrastructure: cloud services, developer tools, enterprise platforms, middleware, integration systems. All the boring plumbing nobody thinks about until it breaks.
The problem isn't the thesis. SOFL tried packaging it with 2x daily leverage and 1.29% fees. Even people who loved the concept passed.
The Leveraged Experiment: Three Months of Glory
SOFL launched July 8, 2025 with standard hype: software platforms compared to electricity and the internet, marketing about "tactical investors" and "magnified exposure."
The prospectus warnings read like cigarette packages: "Not suitable for all investors." "You could lose your full principal value within a single day." "The Fund will lose money if the Index's performance is flat."
By September 19, it was over. Official statement: “Following comprehensive review, liquidation represents the most appropriate course of action.” Translation: nobody bought this and we're cutting losses.
It was dead by October 6.
The Unleveraged Pivot
Now: AOTS. Same thesis, same index, same 50%+ revenue filter. But this time: no leverage, 0.49% expense ratio (down from SOFL's 1.29%), passive index tracking, and lessons learned the hard way.
This is smart product development. SOFL's failure wasn't rejecting software platforms, it was rejecting 1.29% leveraged tactical vehicles when people wanted beta exposure. The market said: “I like this, make it less complicated.”
AOTS strips complexity. No daily rebalancing, no derivatives, no scary warnings. Just straightforward infrastructure exposure for the AI era. And crucially: actually reasonable pricing.
The timing's better too. December 2025 marks two years post-ChatGPT. We're past indiscriminate AI hype, entering the phase where infrastructure matters.
The Low Marginal Cost Philosophy
AOT focuses on "low marginal cost" business models, a brilliant filter for durable compounders. Companies with low marginal costs scale revenue without proportionally scaling expenses, each additional dollar drops almost entirely to the bottom line.
Software platforms are perfect examples. Add the millionth customer for almost nothing compared to the first. No variable COGS, no manufacturing overhead, no inventory. Just recurring revenue at 80%+ gross margins.
This is why software companies trade at absurd multiples. Why Microsoft, Salesforce, ServiceNow print money. Why every enterprise pitch deck includes “scalable platform architecture.”
AOT's core fund (AOTG, launched 2022) returned 24% in 2025, ranking #3 in large-cap growth. So they're not wrong about the framework. SOFL's failure was packaging, not strategy.
What AOTS Actually Holds
Launched December 22. Holdings are... not pure-play.
Top 6 = 40% of fund: NVDA (6.71%), META (6.57%), GOOGL (6.52%), AMZN (6.53%), AAPL (6.46%), MSFT (6.55%). Basically Magnificent 7 minus Tesla.
Pure platforms: Salesforce (2.94%), SAP (3.70%), ServiceNow (1.99%), Oracle (4.10%), Adobe (1.85%)
Payments: Visa (5.45%), Mastercard (5.03%), PayPal (0.69%)
Financial platforms: Schwab (2.05%), Amex (3.18%), Robinhood (1.12%)
Others: Netflix (4.44%), Intuit (2.14%), AppLovin (2.04%)
So, they went with the diversified approach. Microsoft and Apple are 6.5%+ positions despite platforms being maybe 20-30% of business.
Smart (lower volatility, proven winners) and disappointing (QQQ-lite with extra fees). 0.49% is reasonable but you're paying 0.46% more than VOO for concentrated QQQ with payment processors.
The Real Innovation: Iteration
Most failed ETF launches die quietly. Sponsors close them and move on.
AOT said “the problem wasn't concept, it was execution.” Then fixed execution. That's uncommon - most products are fire-and-forget.
This suggests genuine belief in software platforms, not opportunistic launching. They're taking a second swing with better design. Conviction matters.
Conviction doesn't guarantee success. But it means they'll support the fund better, market intelligently, give it time to gather assets.
The Verdict: Priced to Survive, Not Win
More interested than SOFL. Different packaging, different intent.
SOFL was leveraged trading vehicle pretending to be investment. AOTS is straightforward passive index focusing on platforms. Fundamentally different.
The good: 0.49% is reasonable for thematic. Not cheap, not robbery. They learned from SOFL's 1.29% disaster. Passive eliminates rebalancing costs and volatility decay.
The problematic: Holdings reveal QQQ-lite. When 40% is NVDA/META/GOOGL/AMZN/AAPL/MSFT, not differentiated. Concentrated mega-cap tech with "platform" narrative overlay.
Reality: AOTS survives longer than SOFL (it’s a more sensible product). Probably won't thrive (charging 0.49% for exposure available through QQQ at 0.20%). Infrastructure thesis sound, execution is “tech winners with payments” rather than “pure platforms.”
They priced to survive, not win. At 0.49%, they'll gather some assets from advisors wanting thematic exposure and retail liking the story. Won't become definitive platform play because portfolio reflects mega-cap concentration, not platform purity.
Sometimes You Need a Second Attempt
There's something admirable about trying after failing. Most would look at SOFL's three-month lifespan and conclude the market hated their idea. AOT concluded market loved idea but hated execution.
Correct. Software platforms as infrastructure is good thesis. 2x leverage at 1.29% was terrible execution. Unleveraged at 0.49% is better.
Now that AOTS has launched (December 22, 2025), we can evaluate: They priced reasonably. They simplified the structure. They learned. Whether they actually win depends on whether investors want concentrated mega-cap tech with a platform narrative at premium pricing versus just owning QQQ.
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