MEME ETF seeks to exploit retail investor sentiment

NEW YORK, Aug.26 (Reuters) – Investors looking to bet on the “meme stock” phenomenon that has characterized the retail boom may soon have a new way of doing it, with the Roundhill MEME exchange-traded fund , which tracks an index made up of popular social media stocks.

The ETF, which requires regulatory approval, will seek to track the performance, before fees and expenses, of the Solactive Roundhill Meme Index, which in turn seeks to track the performance of “meme stocks,” according to a file filed Thursday with of the United States Securities Commission.

Meme stocks include U.S. stocks and deposit receipts from companies that have a high level of social media mentions, combined with high short interest, both of which indicate market sentiment, according to the filing.

ETF providers have jumped into the volatile meme-stock frenzy, which peaked in January, when individual investors coordinated online through forums like Reddit’s WallStreetBets, to push up shares in video game retailer GameStop. Corp (GME.N) by about 1,600% to punish short sellers. who bet against. Read more

ETF VanEck Vectors Social Sentiment (BUZZ.P), which is backed by Barstool Sports Inc founder Dave Portnoy, is investing in popular social media stocks and has gained 10% since launch in March, underperforming versus the S&P 500 (. SXP) gain 19% over the same period.

FOMO (FOMO.Z), an active ETF launched by Tuttle Capital Management in March, also seeks to track companies with strong sentiment on social media, as well as special acquisition companies and cryptocurrency companies. It is up 2.5% since its launch.

MEME’s index constituents will be rebalanced every two weeks based on social media attention level and short-term interest, according to the record.

Reporting by John McCrank; additional reporting by Noel Randewich; edited by Jonathan Oatis

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