EXCLUSIVE: Roundhill Launches Big Bank ETF With 6 Holdings, Highlights Diversified Deposits, Stronger Balance Sheets

An ETF offering exposure to the six largest U.S. banks launched Tuesday from Roundhill Investments. Here’s a look at the ETF, its holdings and why it’s important as the banking sector struggles.

What Happened: The Roundill Big Bank ETF BIGB is a new ETF that holds equal weightings of the six largest U.S. bank stocks.

The ETF launch comes after banks like SVB Financial SIVB's Silicon Valley Bank, Silvergate Capital SI and Signature Bank SBNY have put pressure on the sector.

“In the wake of the banking failures at a Silicon Valley Bank, Signature Bank of New York, and Silvergate, individuals and institutions alike are migrating banking relationships to the institutions deemed too big to fail,” Roundhill Investments Chief Strategy Officer Dave Mazza said.

The Roundhill Big Bank ETF holds positions in the following companies:

Bank of America Corporation BAC

Citigroup C

JPMorgan Chase & Co JPM

Goldman Sachs GS

Morgan Stanley MS

Wells Fargo & Co WFC

The ETF will be rebalanced quarterly and reconstituted annually. The goal of the fund is to provide concentrated weighting and exposure to the largest U.S. bank stocks, without typical filler stocks found in most ETFs.

“BIGB allows investors to achieve exposure to these money center banks without the potential exposure to smaller financial services companies such as regional banks, brokerages, and insurance companies found in existing financial ETFs.”

The ETF has an expense ratio of 0.29%.

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Why It’s Important: The launch of the banking sector ETF from Roundhill comes at a time when investors are looking for banks without liquidity issues and have diversification among depositors and account types.

“There is a crisis of confidence in regional banks driven by a realization that many are non-diversified and come with greater risks,” Mazza told Benzinga. “Much of these risks had been overlooked in a low rate environment. At the same time, regionals were being held to lower risk standards, so they had advantages compared to larger banks.”

Mazza told Benzinga the six banks selected for the new Roundhill ETF could benefit from the recent bank collapses.

“While the initial move may have been a flight to quality, the six big U.S. banks will be beneficiaries of this turmoil, as the big banks have more diversified deposits and greater product breadth along with stronger balance sheets.”

Along with the banking sector-specific ETF, Roundhill said it plans on launching similar funds targeting the technology, airlines and defense sectors, holding only the top companies in each respective ETF. The ETFs will have the symbols BIGT, BIGA and BIGD, respectively.

“Recent market developments have reinforced what we have been hearing from investors for years about the challenges of existing sector ETFs. Roundhill’s BIG ETFs offer investors precise access to the most important companies in specific economic sectors,” Mazza said.

Roundhill is well-known for launching several first-to-market thematic ETFs, including the Roundhill Sports Betting & iGaming ETF BETZ and the Roundhill Ball Metaverse ETF METV.

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