Roundhill Adds Tech Fund to BIG ETF Family

Roundhill is following up its launch of an ETF targeting a concentrated portfolio of big banks with a similar fund focused on technology. The Roundhill BIG Tech ETF (BIGT) offers exposure to what is now known as the FAAMG complex of stocks (Meta Platforms Inc./Facebook, Apple Inc., Amazon.com Inc., Microsoft Corp. and Alphabet Inc./Google) via swaps and direct ownership. 

The fund has an expense ratio of 0.29% and lists on the Nasdaq stock market. 

The BIG ETF concept is fairly simple. It offers exposure to a small number of the largest and most liquid companies in the targeted category, holding not just equities but swaps tied to the relevant securities. Because there are such a small number of securities represented, the swaps are necessary to meet diversification requirements for ’40 Act funds.  

Dave Mazza, Roundhill’s chief strategy officer, points out that Netflix has been bumped from the cluster of companies known as the FAANG stocks and replaced with Microsoft.  

“Perhaps it's driven by their decline in market cap, but more so I think it goes back to [if] it is really a tech platform, like Amazon Web Services is or all the things that Apple, Microsoft and Alphabet are doing,” he commented, noting that while Meta and Amazon have been less technology-oriented in recent years, their inclusion in BIGT is more representative of how investors view the technology sector.  

A Growing Family 

In late March, Roundhill launched the first ETF in its BIG family, the Roundhill BIG Bank ETF (BIGB). That fund covers the five to 10 largest and most liquid companies in the banking category. As of April 10, the portfolio offered exposure to five banking companies: Goldman Sachs Group Inc., Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co. and Bank of America Corp. 

The initial filing for Roundhill’s BIG lineup also included funds covering airline, defense, oil and railroad companies. The most recent filing expands upon the concept to include the pharmaceuticals, homebuilders and retail industries. 

Although the focus of the funds is on size and liquidity, Mazza notes that the funds are actively managed and thus the managers have a certain amount of latitude to consider other criteria, like whether a company is profitable or not.  

“We'll certainly be providing ongoing monitoring as we think about what constituents make sense for a particular portfolio,” he said.  

Mazza notes that the categories represented in the BIG family of ETFs are determined by common sense and where Roundhill sees the opportunities in the space. He cites the Nasdaq-100 as an example of what many investors consider to be a tech index, even though it is not a pure play on the sector. 

“This is a way to give investors that precision that we believe they’ve been asking for,” he added.  

Contact Heather Bell at [email protected]