Roundhill ‘MEME’ ETF makes a buzz after SEC filing

Highlights

• Roundhill Investments on Thursday filed for a Roundhill MEME ETF under the ticker ‘MEME’.
  
  
• The ETF will track the Solactive Roundhill Meme Stock Index.
  
  
• The MEME ETF will have an expense ratio of 0.69%.

The meme stock craze has been at its peak early this year. Some meme stocks saw massive trading volumes backed by their social media backers.

It is because the social media platforms acted as discussion forums for retail investors to pick stocks. And the chats surrounding some stocks, like GameStop and AMC, grew so louder that they triggered a massive buying-frenzy on the online trading apps.

Roundhill MEME ETF 

Roundhill Investment grabbed the headlines after it filed for Roundhill MEME ETF under the symbol ‘MEME’ with the Security and Exchange Commission on Aug 26.

So, what may have triggered that reaction from the press or the public? Perhaps, it is the Roundhill’s MEME theme. In fact, meme stocks are a product of 2021. A social media driven meme frenzy can influence investors’ sentiments that impact trading and the larger market. 

Roundhill raised people’s eyebrows after it chose the ‘MEME’ ticker. It has been since a major talk of the town. Symbols with an English word are usually more popular among new investors. 

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Roundhill ETF will have an expense ratio of 0.69%. This passively managed meme ETF aims to track the performance of Solactive Roundhill Meme Stock Index before fees and expenses. 

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Source – pixabay

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Solactive Roundhill Meme Stock Index

The index, which comprises only meme stocks, also tracks the performance of other such stocks in the market for inclusion. Meme stocks, including the American depositary receipts (ADRs), have two attributes: high social media activity over certain stocks or symbols and high short interest. The SEC also describes a meme stock based on these two indicators.

The Roundhill Index will select stocks based on a social media activity score, calculated based on the number of times a company name or the ticker was mentioned on specific platforms over a 14-day period.

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The index will rebalance its components bi-weekly. The ETF expects to invest at least 80% of net assets in meme stocks and have a 95% or better correlation, before fees and expenses, with the Index under normal circumstances.

ETFs like VanEck Vectors Social Sentiment ETF (BUZZ) gained 10% since its launch in March this year. It tracks stocks popular on social media.

FOMO ETF (FOMO) was also launched in March this year, and it also tracks companies with high social media mentions, cryptocurrency, and SPACs. It rose around 2.5% since March. 

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Bottomline

The meme stock investors can now be part of an extended, transparent, and less risky meme club with the launch of the MEME ETFs. The MEME craze is only likely to grow stronger.