ETFs Tracking Meme Stocks Experience A Resounding Surge As Investors Chase Year-End Equity Rally: 'Animal Spirits Are Starting To Run Hot Again'

The meme stock wave that made headlines in 2021 is back in focus as the latest market rally pulls speculative bets back into the spotlight. Investors are showing renewed interest in these stocks as the end of the year approaches.

DataTrek Research’s cofounders, Nicholas Colas and Jessica Rabe, dissected the recent performances of ETFs related to popular meme stocks. These ETFs include the Roundhill MEME ETF MEME/USD, the Robotics & AI ETF BOTZ/USD, and iShares Russell 2000 Growth IWO/USD, reported Business Insider.

DataTrek stated: “The upshot: the reemergence of meme stocks shows investors’ animal spirits are starting to run hot again.”

Over the five trading days leading up to Tuesday, these funds outperformed the S&P 500, despite a widespread equity rally and declining Treasury yields.

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In that period, MEME, BOTZ, and IWO witnessed gains of 10.8%, 6.6% and 5.9% respectively, surpassing the S&P 500’s 3.1% gain. DataTrek also noted that MEME and BOTZ outpaced the benchmark index since its Oct. 27 low.

DataTrek explains that the average returns of these three ETFs’ top five holdings have consistently bested the S&P in the last five days, one month and year-to-date, often by significant margins. They also emphasized that broader baskets of names are attracting bullish bets instead of individual winners, as renowned meme stocks like GameStop and AMC have seen notable declines in that stretch.

Despite this, Colas and Rabe maintain that the recent outperformance of funds exposed to meme stocks mirrors “generally bullish market conditions.” They also predict the November stock rally will persist till the year’s end based on S&P 500 sector correlations.

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