And guess what? We may finally have a REAL meme stock ETF, which has us all:
According to the prospectus, the Roundhill MEME ETF “seeks to track the performance, before fees and expenses, of the Solactive Roundhill Meme Stock Index.”
Roundhill appears to have its finger on the pulse, so it’s no shocker they’re in the meme stock game. They have several ETFs targeted hot, social-oriented areas of the market, including:
- The eSports ETF (NERD)
- Sport Betting (BETZ)
- Streaming (SUBZ).
So let’s ask the obvious question – which stocks are in the Solactive Roundhill Meme Stock Index?
Unfortunately, we can’t find out because it doesn’t exist yet.
But according to the filing, this is how the Solactive Roundhill Meme Stock Index will select its stocks:
The initial Index universe will consist of all issuers included in the Solactive GBS United States All Cap Index and that meet specified minimum market capitalization and average daily trade volume requirements.
Each issuer in the universe is then assigned a “social media activity score,” which is based on the number of mentions of a company’s name or its ticker over a trailing 14-day period on specific social media platforms defined in the Index methodology, the primary purpose of which is to facilitate discussion of the performance of the financial industry generally and/or the stock or options markets specifically.
Upon each Selection Day (as defined below), the top 50 issuers by social media activity score are then ranked according to their short interest, which is assigned by an independent third-party data provider. The resulting top 25 issuers by short interest will be selected as the components of, and equally weighted in, the Index.
So essentially, the index will include stocks with high short interest, and which are actively discussed on social media platforms.
Therefore, there is a chance that MEME will be the first real meme stock ETF.
The existing meme stocks ETFs – the VanEck Vectors Social Sentiment ETF (BUZZ), the FOMO ETF (FOMO), and SoFi Social 50 ETF (SYFY) – are more like tech ETFs with a few meme stocks here and there.
For example, BUZZ, FOMO, and SYFY don’t even have GameStop in their top 10 holdings!
However, based on the criteria for the Solactive Roundhill Meme Stock Index, there is a very good chance Rounhill’s MEME ETF will be the first legitimate meme stock ETF.
As far as fees go, the MEME ETF will have a management fee of 0.69%, which isn’t Vanguard-level cheap, but it’s basically in the range of these types of niche ETFs.
We’ll reserve final judgment until Roundhill Investments actually launches the fund. Hopefully, it will generate decent volume and be a real trading vehicle for active meme stock traders.