Around the world, rampant demand for compute to feed the AI revolution has taken a toll on memory manufacturers. Already, global gaming and computing industries were straining supply, but now, with the AI hyperscalers looking anywhere for processing power and compute, that supply is now in shortage territory. That’s where the new memory ETF DRAM comes in.
Key Takeaways:
- Rampant AI demand for compute has choked semiconductor memory supply globally
- Investing in the space can prove lucrative, with new memory ETF DRAM picking up huge flows amid that shortage
- Its active focus and global remit could help it deliver for the rest of the year.
The Roundhill Memory ETF (DRAM) which launched this month, epitomizes what the ETF wrapper does best. Roundhill recognized white space in the ETF landscape, demand in the investing landscape, and filled it. The ETF’s liquidity, tradability, and transparency together help make it a great option to provide discrete portfolio building blocks.
DRAM comes just as reporting suggests that manufacturers will only meet 60% of demand by the end of 2027. Major names in the space like SK Hynix (000660) and Samsung (SSNLF) are adding fabricators and doing their best to keep up. Overall, however, the demand is huge and the opportunity is there.
DRAM's Investments
So, how does the memory ETF invest? DRAM charges a 65 basis point (bps) fee to invest in global memory firms. That includes a proprietary selection process that assesses market share and revenue. The active memory ETF looks to find market-leading firms with significant market and revenue share in semiconductor memory. That includes high bandwidth memory, NAND flash memory, solid-state drives, hard disk drives, and more. The fund can also use swaps and forwards.
The strategy has seen skyrocketing interest, gathering major AUM. In just a matter of days, it has surpassed $1 billion in AUM, making it a potential standout fund in the space.
“DRAM has been one of the most successful ETF launches in history, crossing the $1 billion mark within its first 10 days,” said VettaFi head of research Todd Rosenbluth. “This is an infrequent occurrence; typically, we only see this milestone reached so quickly when there is a large institutional investor on day one or significant pent-up demand, such as with spot bitcoin ETFs like IBIT.”
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Taken together, the fund represents a potentially explosive ETF. For those wanting a memory ETF to benefit from the ongoing shifts in AI demand, DRAM may be one to really watch.
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