of Round Hill Memory ETF (DRAM) TMX VettaFi said it just reached $9.8 billion in assets under management in 43 days, the fastest pace ever for an exchange-traded fund.
Ahead of Thursday’s milestone, the CEO of Round Hill Investments told CNBC’s “ETF Edge” that the rapid growth has to do with the limited number of companies involved in producing high-bandwidth memory and DRAM chips. These are considered essential to the artificial intelligence revolution.
“Investors are waking up to the fact that the biggest bottleneck in building AI is actually memory chips,” Dave Mazza said Monday. “There’s an incredible supply and demand imbalance in memory, which is one of the reasons stocks are doing so well.”
Mazza points out that only a few companies are involved in making high-bandwidth memory chips.
“This is an area where memory has historically been incredibly cyclical. We’ve seen cycles of boom and bust, and one of the reasons it’s been so cyclical is that memory actually exists everywhere, from your smart TV to your cell phone in your car,” he said. “What’s really changed is the growth and build-out of data centers and AI.”
Mazza estimates that the demand-supply imbalance could widen through 2028 due to AI demand and data center hyperscalers ramping up.
“I’m shocked.”
In a special note to CNBC, TMX VettaFi’s Todd Rosenbluth responded to the popularity of DRAM, which is considered the hottest ETF since Bitcoin mania.
“We are shocked by the rapid adoption of ETFs, as demand for memory stocks through ETFs has not been pent-up like it was for Bitcoin exposure,” the company’s research and editorial director wrote on Thursday. “Thematic ETFs continue to gain traction by providing exposure to fast-growing companies.”
Citi Research’s Drew Pettit is confident the strong performance will continue.
“Stock price momentum is backed by earnings momentum, so that’s where we’ve seen the best earnings revisions this year in the U.S. and globally,” the firm’s research director for U.S. equity and ETF strategy told ETF Edge in the same interview with Mazza on Monday. “Even if we go up 300%, even if our earnings forecast for the next few years goes up 6-8 times, it’s still going to come back at a reasonable price for us.”DRAM is under pressure during Friday trading. But it’s up more than 80% since its inception.
DRAM is under pressure during Friday trading. But it’s up more than 80% since its inception.
