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Let’s take a trip down memory-stock lane.

Asset manager Roundhill last week launched the Roundhill Memory ETF (DRAM), a fund that targets companies manufacturing memory and data storage products, including Micron, Samsung and Sandisk. The fund is actively managed with an expense ratio of 0.65%. Unlike broader semiconductor and artificial intelligence-centric funds, the product is the first purely memory-focused ETF, with positions in just nine companies, Roundhill says. “The memory market has a major opportunity as the AI build continues,” said Thomas DiFazio, Roundhill ETF strategist. “There are only a couple of specialized players that are able to match the demand and build the type of memory that is needed.”

But with memory stocks currently surging, as they have been for the past year, could Roundhill be a little late to the party?

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Other funds — including the VanEck Semiconductor ETF (SMH), the iShares Semiconductor ETF (SOXX) and the Invesco PHLX Semiconductor ETF (SOXQ) — have exposure to the memory sector. However, that exposure is often a minimal allocation to Micron, DiFazio argued. He added that a country-specific fund like the iShares MSCI South Korea ETF (EWY) may have half its portfolio tied to memory stocks Samsung and SK Hynix, but the other half is allocated to a broad variety of local companies. “It’s not as precise as it could be, and that’s where we saw the opportunity,” he told ETF Upside.

Roughly 75% of DRAM’s portfolio is split about evenly between Micron, Samsung and SK Hynix.

In the past 12 months, those stocks have surged 440%, 268% and 456%, respectively.

Insufficient Disk Space. That concentration may be the fund’s biggest risk, said Dan Sotiroff, senior manager research analyst for Morningstar. “These thematic funds are often trying to capture something that’s hot and of the moment, but because of that, they’re buying stocks that are already pretty high,” he told ETF Upside. While thematic ETFs can perform well in short bursts, they often struggle over longer horizons, Sotiroff said. With so few holdings, DRAM amplifies that risk. “You box yourself into a corner,” he said. “You’re talking about a niche of a niche of a niche here.”

If a client wants to hold a thematic ETF, Morningstar suggests doing it outside of a retirement account. “They’re funny money investments, and even then, you want to keep the positions small, less than 3% of your total investment portfolio,” Sotiroff said.

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