Is Now the Time to Invest in Meme Stock ETFs?

Cam White | June 20, 2024

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The financial markets are witnessing a notable resurgence of meme stocks, highlighted by the return of Keith Gill, famously known as Roaring Kitty, after a hiatus of three years. His reappearance has sparked renewed vigor in stocks like GameStop Corp (GME) and AMC Entertainment Holdings Inc (AMC), both of which experienced noticeable price increases following his social media activity. This phenomenon has caught the eye of investors eager to leverage the growing momentum.

For those inclined to tap into this wave, several ETFs present lucrative opportunities. Among them, the VanEck Social Sentiment ETF (BUZZ) emerges as a top contender. This ETF, with an asset base of $67.2 million, primarily invests in large-cap U.S. stocks that enjoy a positive reputation on social media platforms. Tracking the BUZZ NextGen AI US Sentiment Leaders Index, it includes notable meme stocks like GameStop and AMC. With a relatively modest annual fee of 0.75%, BUZZ offers an avenue for investors to harness the social media-driven enthusiasm surrounding these stocks.

Another intriguing option is the SoFi Social 50 ETF (SFYF), which curates its portfolio from the top 50 U.S. stocks that are predominantly held on the SoFi Invest platform. This ETF provides exposure to sectors that resonate well with retail investors, including consumer cyclicals, technology, and communications, holding assets worth $17.1 million and charging a fee of 0.29% annually. It caters specifically to those interested in the pulse of market trends influenced by retail trading behaviors.

On a different note, the Amplify Transformational Data Sharing ETF (BLOK) focuses on blockchain technology but also dips into the meme stock waters by including key players in digital finance like MicroStrategy Inc (MSTR) and Coinbase Global Inc (COIN). With an asset pool of $702.8 million and an annual fee of 0.76%, BLOK offers a diversified portfolio that not only taps into the meme stock narrative but also mitigates risk through its broader technological and financial focus.

The reemergence of Roaring Kitty and the ensuing rally in meme stocks underscore a unique investment landscape where social media influence is undeniable. These ETFs present various strategies for engaging with this volatile yet potentially rewarding market. However, the speculative nature of meme stocks necessitates a cautious approach. Prospective investors should undertake comprehensive research and evaluate their risk tolerance to align their investment decisions with their financial objectives and comfort levels.

In conclusion, the renewed interest in meme stocks, spurred by influential social media personalities, presents both opportunities and challenges. By choosing the right ETFs, investors can navigate this dynamic environment, but the importance of informed decision-making and risk assessment cannot be overstressed in such a speculative investment climate.