Roundhill Investments has witnessed a significant leap in the performance of its exchange-traded funds (ETFs), particularly those related to the Magnificent Seven and artificial intelligence stocks.
Bucking the tech market trend, the Roundhill Magnificent Seven ETF (MAGS) and the Roundhill Generative AI & Technology ETF (CHAT) have experienced a surge of about 15% since the beginning of the year, nearly doubling the return of the tech-heavy Invesco QQQ Trust (QQQ).
In an exclusive interview with Benzinga, Dave Mazza, chief strategy officer at Roundhill Investments, shared insights on the company’s strategic approach, leading to robust performance and increasing investor inflows.
The two funds have recently gathered the highest inflows within Roundhill’s ETF suite, attracting close to $100 million in new investments in just the last month.
Roundhill’s focus on innovation has been instrumental, with the company playing a crucial role in offering innovative and thematic ETFs with a portfolio of 11 funds totaling $850 million in assets under management.
Roundhill’s Assets Under Management, Latest ETF Performance
| ETF Name | AUM ($ mln) | YTD % return |
| Roundhill Ball Metaverse ETF (METV) | 439.57 | 8.4% |
| Roundhill Magnificent Seven ETF | 149.43 | 14.3% |
| Roundhill Generative AI & Technology ETF | 104.36 | 15.2% |
| Roundhill Sports Betting & iGaming ETF (BETZ) | 93.23 | 2.3% |
| Roundhill Acquirers Deep Value ETF (DEEP) | 36.69 | -3.2% |
| Roundhill Video Games ETF (NERD) | 20.84 | 0.6% |
| Roundhill Cannabis ETF (WEED) | 9.40 | 35.2% |
| Roundhill Bitcoin Covered Call Strategy ETF (YBTC) | 4.21 | 9.3% |
| Roundhill S&P Dividend Monarchs ETF (KNGS) | 3.00 | -2.0% |
| Roundhill S&P Global Luxury ETF (LUXX) | 1.32 | 7.8% |
| Roundhill Alerian LNG ETF (LNGG) | 0.72 | -1.4% |
The Magnificent 7 ETF’s Equal-Weight Strategy
Explaining the rationale behind Nvidia Corp. (NVDA) having the largest position in Roundhill’s Magnificent 7 ETF, Mazza highlighted the ETF’s equal-weight strategy involving quarterly rebalancing, leading to temporary shifts in the portfolio’s allocation based on stock performance.
Currently, Nvidia holds a 20% share of the portfolio’s weight, followed by Meta Platforms Inc. (META), while Tesla Inc. (TSLA) comprises less than 10% of the portfolio’s weight.
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How Roundhill Selects AI Stocks
The Roundhill Generative AI & Technology ETF (CHAT) is an actively managed fund focusing on companies at the forefront of the generative AI movement.
To ensure authenticity in its selections, Roundhill scrutinizes corporate documentation for generative AI language and uses a proprietary sector scoring system to verify that revenue sources genuinely arise from AI.
For a company to be included in the ETF, “50% or more of its revenue must come from AI-related business,” according to Mazza.
Metaverse: An Enduring Conviction
Despite the hype and evolving public perception, Mazza emphasized the metaverse as a continued area of conviction, predicting substantial innovation driven by the fusion of virtual reality, augmented reality, and the spatial internet in the years to come.
The Roundhill Ball Metaverse ETF, with over $439 million in assets under management, serves as the company’s flagship fund in this domain.
Diversified Themes: Sports Betting, Cannabis, Bitcoin
Mazza also discussed other ETFs in Roundhill’s portfolio. The Roundhill Sports Betting and iGaming ETF delves into the rapidly growing sports betting industry in the U.S., while the Roundhill Cannabis ETF focuses on the five largest industry operators.
Additionally, Mazza highlighted the Roundhill Bitcoin Covered Call Strategy ETF, offering potential consistent monthly income through options-tied exposure to Bitcoin prices, taking advantage of the cryptocurrency’s volatility.
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Illustration via Pixabay.