(Reuters) -Roundhill Investments relaunched an exchange-traded fund it shuttered two years ago that is designed to track the constantly changing universe of "meme" stocks and the activities of the retail investors who love them, the ETF provider said on Wednesday.
The new actively managed fund, the Roundhill Meme Stock ETF, trading under the symbol "MEME," seeks to capitalize on a trend that has gripped U.S. stock traders intermittently since the pandemic, when a wave of new retail investors took to social media platforms like Reddit to chat about their investment theories and share their hottest stock picks.
Roundhill first launched the ETF in 2021 to capture that initial bout of meme stock exuberance, one dominated by companies like movie theater chain AMC Entertainment and GameStop. The firm closed the fund two years later amid flagging investor interest.
That earlier ETF was a passive fund that relied on social media mentions and short interest to construct its portfolio, said Sumit Roy, an analyst at ETF.com. The new ETF, Roy said, emphasizes trading volume and volatility. It will be actively managed and can rebalance as often as once a week to capture the latest twists and turns in the world of meme stocks.
The current ETF portfolio includes companies like residential real estate platform Opendoor Technologies, fuel cell technology venture Plug Power and quantum computing stocks like Rigetti.
"Retail attention moves in cycles," said Dave Mazza, CEO of Roundhill. "But the drivers behind them are structural" and create recurring waves of enthusiasm by retail investors in myriad concepts. Those drivers, he said, range from the debut of commission-free trading platforms to the creation of online communities of retail investors.
The new ETF, he added, will capture the behavior of online retail communities and include "the companies that become cultural and market touchpoints."
Dan Sotiroff, an analyst at Morningstar, places the revamped ETF in the category of thematic ETFs, a group he says tend to underperform over the longer term.
Analysts, academics and trading organizations that have studied the growth in self-directed retail investing and its impact on financial markets calculate this group now accounts for anywhere from 10% to more than 20% of all trading.
Marco Iachini, senior vice president of research at Vanda Research, said the figure is significantly higher for stocks capturing the imagination and interest of the retail investor community, including meme stocks.