EXCLUSIVE: Roundhill's AI, Magnificent 7 ETFs Shine In Tech Market Rally, Draw $100M Inflow In 1 Month

Roundhill Investments has witnessed a significant leap in the performance of its exchange-traded funds (ETFs), especially those involving the Magnificent Seven and artificial intelligence-related stocks.

Bucking the tech market trend, the Roundhill Magnificent Seven ETF MAGS and the Roundhill Generative AI & Technology ETF CHAT have seen a surge of about 15% since the year’s start, almost 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, which has led to robust performance and rising investor inflows.

Recently, the two funds have garnered the highest inflows within Roundhill’s ETF suite.

In just the last month, Mazza said the two ETFs have drawn close to $100 million in fresh investments.

Roundhill’s focus on innovation has been instrumental, the chief strategy officer said.

“We launched the world's first and most liquid metaverse ETF” alongside the one targeting Magnificent 7 stocks, Mazza said.

With a portfolio of 11 funds and a cumulative $850 million in assets under management, Roundhill is a key player in offering innovative and thematic ETFs.

Table: Roundhill’s Assets Under Management, Latest ETF Performance

The Magnificent 7 ETF’s Equal-Weight Strategy

Mazza explained the reason behind Nvidia Corp. NVDA representing the largest position in the Roundhill’s Magnificent 7 ETF.

The ETF maintains an equal-weight strategy, with rebalancing occurring quarterly. Due to this structure, fluctuations in stock performance within the quarter can result in temporary shifts in the portfolio’s allocation.

Presently, Nvidia holds the lead with a 20% share of the portfolio’s weight, with Meta Platforms Inc. META in the following position, while Tesla Inc. TSLA, which is trailing in performance, comprises less than 10% of the portfolio’s weight.

Read also: Analyst Who Coined ‘Magnificent 7’ Label Declares End Of An Era: ‘I Don’t See These Seven Names Rising Together’

How Roundhill Selects AI Stocks

The Roundhill Generative AI & Technology ETF, which trades under the ticker “CHAT,” is an actively managed fund with a focus on identifying companies at the forefront of the generative AI movement.

To ensure the authenticity of its selections, Roundhill analyzes corporate documentation for generative AI language and employs a proprietary sector scoring system to ensure that revenue sources genuinely stem from AI.

For a company to be included in the ETF, “50% or more of its revenue must come from AI-related business,” Mazza said.

Metaverse: An Enduring Conviction

Despite the hype and evolving public perception, Mazza underscored the metaverse as a continued area of conviction.

The blend of virtual reality, augmented reality and the spatial internet will drive substantial innovation worthy of investment in years ahead.

The Roundhill Ball Metaverse ETF, with over $439 million in assets under management, stands as the company’s flagship fund in this domain.

Diversified Themes: Sports Betting, Cannabis, Bitcoin

Mazza also shed light on other ETFs in Roundhill’s portfolio. The Roundhill Sports Betting and iGaming ETF taps into the rapidly growing sports betting industry in the U.S., while the Roundhill Cannabis ETF concentrates on the five largest industry operators.

Mazza discussed the Roundhill Bitcoin Covered Call Strategy ETF, which offers the potential for consistent monthly income through options-tied exposure to Bitcoin prices, capitalizing on the cryptocurrency’s volatility.

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Illustration via Pixabay.