Memory: The ETF betting big on three global giants

The explosion of the memory sector is attracting investors. Roundhill has seized the opportunity by launching the first ETF dedicated to memory chipmakers. The market has welcomed the initiative, propelling the product's assets under management to $1bn in just two weeks, even though thematic ETFs sometimes have a reputation for arriving a little late to the party.

Since the arrival of ChatGPT in late 2022, all sectors closely or remotely linked to artificial intelligence have benefited from massive market enthusiasm. From giants like Nvidia to smaller French players like Soitec, all have experienced periods of spectacular growth. It did not take long for ETF issuers to bring products related to the sector to market. Amundi, iShares, and others have enabled investors to purchase a single product providing exposure to the growth of specific segments of AI.

The segment currently in vogue is memory chips, which represents one of the industry's primary bottlenecks. This is evidenced by the success of the first ETF focused solely on this sector. Issued by Roundhill under the ticker DRAM (a clever choice, as the acronym refers to a type of memory), the ETF raised over $1bn in less than two weeks—an unprecedented performance for an asset manager of this size.

What is in this basket?

Unsurprisingly, Europe is absent from the selection. Assets are predominantly listed in Asia (60.43%), with 49.25% in South Korea, followed by the United States (37.65%).

Samsung Electronics dominates with 24.99% of the portfolio, posting a spectacular gain of 87.24% YTD. Despite a setback with the previous generation, the South Korean giant is now producing HBM4 chips, the highest-performing in the sector.

SK Hynix follows, with 24.22%. Unlike Samsung, this South Korean group is exclusively focused on memory. As a preferred supplier to Nvidia, it has said that its current production capacity will not suffice to meet exponential demand, forcing it to invest in new production lines.

Micron Technology holds the third spot with 23.83%. As the leading American player, the company has established itself as a benchmark stock against Asian competitors that are sometimes less accessible. Now detached from its consumer business, the group focuses exclusively on AI-dedicated semiconductors.

The ETF also includes players weighing less than 5% each, such as Kioxia Holdings, Sandisk, Western Digital, Seagate, Nanya and Winbond. In all, nine stocks composed the product at launch. A notable feature is that this is an actively managed ETF: the weightings and stock selection are subject to change.