Roundhill MEME ETF
The ETF was launched as the first ETF explicitly designed to track the performance of meme stocks, MEME will rebalance on a biweekly basis.
The ETF will be based on the Solactive Roundhill Meme Stock Index, which holds 25 equal-weighted U.S-listed stocks.
The holdings in the index and ETF are based on “elevated social media activity and high short interest.” Data for social media activity and short interest will be provided by third-party data providers, Roundhill said.
The fund, which has an expense ratio of 0.69 percent, could experience higher volatility than other ETFs, the company said.
Why Meme Stocks
Roundhill launched a meme-themed fund due to the rise in commission-free trading and retail trading volume growth.
Retail accounts for 21.3 percent of equity volume in 2021, according to Bloomberg Intelligence, which is more than double its market share back in 2010.
Twitter Inc., Reddit (r/WallStreetBets), Discord, and Stocktwits have helped boost the amount of research and investment ideas shared and used by retail traders, Roundhill said. WallStreetBets has over 11 million users, up from 1 million at the start of 2021.
“After witnessing the likes of GameStop, AMC, DWAC and even Dogecoin become crowd favorites overnight, we thought it made sense to create an ETF that could allow for investors to gain exposure through a diversified vehicle,” Roundhill Investments co-founder and CEO Will Hershey told Benzinga.
Roundhill secured the MEME stock ticker back in April, according to Hershey.
“It’s a lot of work to keep up with what’s trending each day or week on social media and MEME intends to do that for investors that want to be a bit more passive but still be exposed.”
While some may see meme stocks as a fad or short-term investing item, Hershey said meme stocks are here to stay.
“The impact of social media on trading and investing isn’t going anywhere.”
Hershey cites items like Scottrade and Yahoo! Finance message boards being places for investment ideas several years ago. The emerging companies like Reddit, Twitter, Discord and Robinhood add to the strength of social media and community investment ideas, he said.l
“I think commission-free trading, the ease of access for options trading and even fractional share trading have all contributed as well.”
The initial 25 holdings in the meme stock ETF are listed as followed:
AMC Entertainment Holdings, Advanced Micro Devices, Blackberry, Chegg Inc., Clover Health Investments, Crowdstrike Holdings, DraftKings Inc., Digital World Acquisition Corp., GameStop Corp., Canoo Inc., Robinhood Markets, Lucid Group, Moderna Inc., Cloudflare Inc, Palantir Technologies, Peloton Interactive, Roblox Corp., Roku Inc., Snap Inc., SoFi Technologies, Square Inc., Teladoc Health, Tilray Inc., Upstart Holdings, and ContextLogic Inc.
Thematic ETFs like MEME are nothing new to Roundhill Investments. The company has launched several first-to-market ETFs, including the first pure play sports betting ETF with Roundhill Sports Betting & IGaming ETF and the Roundhill Ball Metaverse ETF, an ETF tracking the growing metaverse industry.
“In being first, you are able to become the ‘benchmark’ and it becomes difficult for copycats to replicate that success in terms of trading volumes and assets under management,” Hershey said.
Other themes from Roundhill include subscription-based companies, sports teams and leagues, esports and digital infrastructure.
When asked what’s next for Roundhill, Hershey told Benzinga that the company is working on new ideas and plans to issue more ETFs.
By Chris Katje
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