Meme-stock ETF left for dead gets resurrected for retail crowd

Breaking into the $13 trillion US ETF market is tough. Staging a comeback? Even tougher. That’s not stopping Roundhill Investments as it revives a pandemic-era trope — the MEME ETF. 

The original fund was shuttered in 2023 when it looked as if the craze it was born in had blown over. It hadn’t. Now the New York-based firm is resurrecting the Meme Stock ETF on Wednesday.

In the years since it closed, gambler spirits have flourished, appetites for long-shot bets deepened, and the regulatory backdrop grown ever-more favorable. ETFs themselves have been a key conduit to the tastes, offering everything from one-click leveraged bets to high-yield options plays. It’s within this teeming ecosystem that MEME’s purveyors hope their second act will play.

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“In some ways, ‘meme’ is still perceived as a dirty word. Many still scoff at what the retail community does on various forums. But that’s an entirely antiquated view,” said Dave Mazza, Roundhill’s chief executive officer. “What didn’t fade is the influence of retail in today’s equity market.”

So-called meme stocks entered the lexicon in 2021 as legions of retail traders convened on social media to orchestrate massive short squeezes in the likes of GameStop Corp. and AMC Entertainment Holdings Inc. Product managers were quick to capitalize on the extreme day-trading activity that year by introducing funds like Roundhill’s original MEME and the VanEck Social Sentiment ETF (BUZZ). MEME shuttered with barely $3 million in assets. 

Fast-forward to this year, with markets hitting all-time highs and the Trump administration pushing an agenda that’s engendered rallies in various hype-driven corners of the market, a speculative stock frenzy has once again reemerged — this time with a new band of leaders. The movement has ingrained itself in the cultural zeitgeist, proving its staying power and everydayness. 

“The comeback of MEME ETF isn’t so much about the fund itself, but more an indicator of where we are in the cycle with signs that speculation is creeping back into markets and investors are willing to chase risk again,” said Athanasios Psarofagis, ETF analyst at Bloomberg Intelligence. “It may be a challenge for the ETF, but I think they learned their lesson the first time,” about how difficult it can be to gather assets.

MEME 2.0

The reboot comes with a twist. The original version passively tracked a meme-stock index, but the new one is actively managed and zeros in on a tighter basket of roughly two dozen stocks that exhibit what Roundhill views as meme-like characteristics, such as extreme price volatility. Its top holdings from the get-go include Opendoor Technologies Inc., Plug Power Inc. and Applied Digital Corp.

Roundhill will look at a mosaic of inputs — not just quantitative signals, but also retail sentiment — to identify the next wave of meme names, according to Mazza. That means parsing subreddits, monitoring retail-versus-institutional trading flows and keeping tabs on the digital chatter that so often fuels the wild moves.

In other words: it’s part Wall Street, part digital carnival — and Roundhill is betting that it can get it right the second time around.

To keep pace with the ever-shifting retail hype cycle, the ETF will rebalance at least once a week. It carries an expense ratio of 69 basis points.

Roundhill joins other issuers that have pounced on the popularity of ETFs by pushing out products targeting ever smaller and more volatile categories of stocks. Leveraged and inverse single-stock funds have gathered billions of dollars.

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“Retail investors are once again partying like it’s 2021. There’s currently an insatiable appetite for risk,” said Nate Geraci, president at NovaDius Wealth Management. “For this MEME ETF to achieve success, it will likely need its own viral moment.” 

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