MEME ETF Shutters as Thematic Funds Lose Luster

The fund from Roundhill Investments brought in only $2.6 million under management since its launch in December 2021.

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Finance Reporter
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Reviewed by: etf.com Staff
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Edited by: Mark Nacinovich

A meme-stock ETF issued by Roundhill Investments is closing nearly two years after its launch as it failed to bring in significant inflows or match the S&P 500.  

The Roundhill MEME ETF (MEME) will liquidate in December, according to Roundhill. The fund, which aimed to capitalize on the meme-stock craze that boomed during the pandemic, has floundered since its launch in December 2021. It brought in only about $2.6 million, and the fund is down 31% year to date.  

While niche thematic ETFs seek to offer exposure to a specific phenomenon or new craze, investors rarely see gains because fad-driven funds can be difficult to time correctly. According to a Morningstar research report, global thematic funds have gained about 7% overall over the past five years, but investors have seen only about 2.5% of those gains reflected in their portfolio. Other buzzy trends, such as a slew of metaverse ETFs and marijuana ETFs, have risen and fallen in popularity.  

“Thematics go through a cycle because it’s a compelling narrative and its intuitive to investors to buy these types of products,” said Bryan Armour, ETF analyst at Morningstar. “But then everyone realizes that they’re not a very effective long-term investment tool.”  

Meme-Stock Mania 

In 2021, retail investors shocked Wall Street as they collaborated on social platform Reddit to drive up the price of certain stocks, most notoriously GameStop Corp. Yet the fad has largely receded into the background. Roundhill’s MEME operated by scoring various securities by the amount of time they were mentioned on specific social-media platforms over a two-week period.  

Deborah Fuhr, managing partner and founder of research firm ETFGI, noted that investors who drove meme stocks were day trading during the pandemic. Now, with more regular work schedules, day traders no longer play as big a part in moving markets. “During COVID, a lot of people were at home using ETFs more as trading ideas as opposed to investment ideas,” Fuhr said.  

Yet not all thematic ETFs capture only fleeting momentum. Armour argued that a trend like artificial intelligence has staying power compared with meme stocks, which spoke to a very narrow audience.  

Another reason why MEME failed was simply its portfolio: The fund has sunk nearly 55% since its launch.  

Contact Lucy Brewster at [email protected].  

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.