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Soon, meme stock investors might not have to scroll through Reddit and Twitter hoping to find the next GameStop.
On Thursday, Roundhill Financial filed a plan with the U.S. Securities and Exchange Commission to launch the Roundhill MEME ETF (MEME). The fund would track an index that includes stocks of companies with elevated levels of social media activity and short interest — both factors that go into making a meme stock. It would rebalance based on those levels of activity and interest every two weeks, and trade on the New York Stock Exchange.
An exchange-traded fund (ETF) is a basket of securities, like stocks, that can be bought and sold on an exchange like a stock. The MEME ETF is the latest attempt to capture investors' obsession with meme stocks, which made a big splash earlier this year when an army of retail traders banded together to pump up GameStop's stock price and sink hedge funds that were short-selling the stock. Since then, AMC, BlackBerry and others have also garnered attention on social media platforms like Reddit, solidifying themselves as meme stocks alongside the video game retailer.
Other investment firms have tried to cash in on the surge of retail investing and social media buzz. The VanEck Vectors Social Sentiment ETF (BUZZ), which launched in March, tracks an index of the 75 large-cap U.S. stocks that show the highest positive investor sentiment and bullish perception based on sources like social media and news articles. Meanwhile, Tuttle Capital Management's recently launched FOMO ETF attempts to capitalize on the hype around meme stocks while limiting risk.
It’s actually not too difficult to identify potential meme stocks, Matthew Tuttle, chief executive of Tuttle Capital Management, previously told Money. The trick is looking for small-cap companies with a large amount of short-selling interest from Wall Street's institutional investors. But it is tough to time a meme stock right.
“It’d be great to predict it, but I’d rather join the parade than try to start the parade,” Tuttle said.
Soon, a fund may do all that work for you.