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Identifying the Key Themes of 2024

Thematic investing is about identifying trends and being willing to try to see into the future. Like Rome wasn’t built in a day, neither were themes like the internet or clean energy that are commonplace today. At one point, the automobile industry was a nascent theme.

More recent themes like the metaverse have proved that the way of the future isn't always linear. It can come and go. Big drivers of returns are often fueled by catalysts like regulations or technological advancements, as opposed to traditional sources like mean reversion.

Looking to 2024, we identify potential catalysts for each Roundhill theme that could revitalize each theme into front page news. We don’t have a crystal ball, but we do think about themes each and every day, laying out some of our surprise concepts below.

 

Sports Betting

ESPN BET further legitimizes sports betting, making watching sports without skin in the game a thing of the past.

While mainstream media has attempted to integrate sports betting to mixed results, PENN Entertainment’s rebranded app appeared to meet lofty expectations in its first month.1 This tie-up puts legalized sports betting front and center heading into the NFL Playoffs. While the venture will likely spend heavily on customer acquisition, their brand has the power to bring in a wider array of betters, including women. However, the industry remains incredibly competitive with companies looking to out-promote each other. Sports betting stocks performed well in 2023, but lagged the broader market, so material progress on profitability and an increase in users may help to boost sentiment toward the sector.

Click here for current holdings: Roundhill Sports Betting & iGaming ETF (NYSE: BETZ)

 

Metaverse

While expensive, the Apple Vision Pro is wildly successful putting the metaverse back into the headlines.

After a disappointing 2022, investors have largely turned their backs on metaverse stocks shifting to other trends including Generative AI. However, Meta Platforms made it clear earlier this year that the Metaverse and AI are not mutually exclusive. But like the smartphone, Apple’s entry will help to add credibility to the ultimate vision of the Metaverse. The Metaverse is one of the key catalysts to increase the digital economy’s share of global GDP, just as prior platforms such as the Internet, mobile and cloud computing have done in the past. Our analysis shows that the economic impact of the Metaverse could reach $10.7 trillion in a decade, comparable to other third-party estimates such as those from Citi and KPMG, according to those firms’ publications. 

Click here for current holdings: Roundhill Ball Metaverse ETF (NYSE: METV)

 

Generative AI

Generative AI usage inflects.

The drama around Sam Altman’s brief ouster from OpenAI may have foreshadowed that AGI is closer than expected. On the flip side, the European Parliament is trying to lead the regulatory charge by introducing the Artificial Intelligence Act.2 Regardless of increased regulations, companies will likely recognize the potential of AI to transform their businesses. This will push skeptics and holdups to embrace the technology or be left behind. Since investors have already bid up the prices of obvious beneficiaries, such as Nvidia and Microsoft, they may turn their attention to the next leg of AI beneficiaries including Salesforce and ServiceNow.  

Click here for current holdings: Roundhill Generative AI & Technology ETF (NYSE: CHAT)

 

Video Games

Grand Theft Auto VI will become the most successful video game launch ever. (It’s already the most watched trailer in the first 24 hours of release.) But, it is not coming until 2025.

While we are discussing 2024 and not 2025, the GTA VI news is driving renewed interest in the gaming world. Overall, this positions gaming for softness in 2024, especially as growth in 2023 was lackluster. However, considering how much is riding on these releases, investors may benefit from looking at the stocks sooner than later. In the meantime, Netflix is expected to release new games for both mobile and PC. There is also excitement around Samsung launching its own cloud gaming service. The intersection of metaverse and gaming will likely lead to more immersive experiences powered by VR and AR. Fortnite and Roblox are also getting hot again too, so the video gaming industry may have an opportunity to surprise to the upside in 2024.

Click here for current holdings: Roundhill Video Games ETF (NASDAQ: NERD)

 

Cannabis

In an effort to appeal to younger voters, cannabis legalization is embraced by Democrats and Republicans politicians setting the stage for federal legalization.

Cannabis stocks have struggled to gain a foothold over recent years as legalization at the state level has increased competition, but not profits. Without legalization at the Federal level or the SAFE Banking Act, cannabis companies have been challenged. However, most Americans favor the legalization of cannabis, particularly younger Americans. In fact, a recent Gallup poll showed that a record 70% of Americans now support marijuana legalization.3 The 18 to 34 year old subgroup stands at 79%. While we have seen this before, investors should prepare for momentum to potentially swing in their favor as both parties come together in an effort to appeal to voters.

Click here for current holdings: Roundhill Cannabis ETF (CBOE: WEED)

 

Luxury

Global luxury demand softens, pushing down valuations for the sector offering value investors an opportunity to buy the names at discount for the first time in years.

Bain & Company projects the global luxury market to increase a 8% to 10% growth rate in 2023 proving to be surprisingly resilient in the face of global economic uncertainty. However, they are forecasting a slowdown in 2024 with growth rates in the low to mid single digits.4 A key driver is divergence at the regional level with European and China picking up, but the U.S. softening particularly aspirational shoppers. Global luxury stocks suffered relative to the broader market in 2023 as investors anticipated a corresponding drop in earnings. However, this derating may offer an opportunity for investors to step into the sector since valuations are not as rich and with central banks like the Federal Reserve are pivoting to cuts rather than hikes.

Click here for current holdings: Roundhill S&P Global Luxury ETF (NYSE: LUXX)

 

Forecasts are inherently limited and should not be relied upon when making investment decisions. There is no guarantee projected growth will occur.

1 https://sportshandle.com/espn-bet-solid-first-month/#:~:text=After%20launching%20on%20Nov.%2014,of%20around%206%25%20by%20handle.

2 https://www.europarl.europa.eu/news/en/press-room/20231206IPR15699/artificial-intelligence-act-deal-on-comprehensive-rules-for-trustworthy-ai

3 https://news.gallup.com/poll/514007/grassroots-support-legalizing-marijuana-hits-record.aspx

4 https://www.bain.com/about/media-center/press-releases/2023/global-luxury-market-projected-to-reach-1.5-trillion-in-2023-a-new-record-for-the-sector-as-consumers-seek-luxury-experiences/

 

BETZ

Carefully consider the Fund's investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund's prospectus. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal. Risks include those related to investments in the highly-competitive sports betting industry, including from illegal or unregulated companies. Expansion of sports betting (both regulated and unregulated), including the award of additional licenses or expansion or relocation of existing sports betting companies, and competition from other leisure and entertainment activities, could impact these companies' finances. Small and midcapitalization companies may be more volatile and less liquid due to limited resources or product lines and more sensitive to economic factors. Fund investments are concentrated in an industry or group of industries, and the value of Fund shares may rise and fall more than more diversified funds. Investments in foreign securities involve social and political instability, market illiquidity, exchange-rate fluctuation, high volatility and limited regulation risks. Emerging markets involve different and greater risks, as they are smaller, less liquid and more volatile than more develop countries. Depositary Receipts involve risks similar to those associated with investments in foreign securities, but may not provide a return that corresponds precisely with that of the underlying shares. Please see the prospectus for details of these and other risks.

Distributor: Foreside Fund Services, LLC.

 

METV

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the METV Metaverse ETF please call 1-855-561-5728 or visit the website at https://www.roundhillinvestments.com/etf/METV. Read the prospectus or summary prospectus carefully before investing.

Investing involves risk, including possible loss of principal. Metaverse Companies and other companies that rely heavily on technology are particularly vulnerable to research and development costs, substantial capital requirements, product and services obsolescence, government regulation, and domestic and international competition, including competition from foreign competitors with lower production costs. Stocks of such companies, especially smaller, less-seasoned companies, may be more volatile than the overall market. Metaverse Companies may face dramatic and unpredictable changes in growth rates. Metaverse Companies may be targets of hacking and theft of proprietary or consumer information or disruptions in service, which could have a material adverse effect on their businesses. Fund investments will be concentrated in an industry or group of industries, and the value of Fund shares may rise and fall more than more diversified funds. Foreign investing involves social and political instability, market illiquidity, exchange-rate fluctuation, high volatility and limited regulation risks. Emerging markets involve different and greater risks, as they are smaller, less liquid and more volatile than more developed countries. Depositary Receipts involve risks similar to those associated with investments in foreign securities, but may not provide a return that corresponds precisely with that of the underlying shares. Please see the prospectus for details of these and other risks.

As an ETF, the fund may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Due to the costs of buying or selling Shares, including brokerage commissions imposed by brokers and bid/ask spreads, frequent trading of Shares may significantly reduce investment results and an investment in Shares may not be advisable for investors who anticipate regularly making small investments. The Fund may invest in securities issued in initial public offerings. The market value of IPO shares will fluctuate considerably due to factors such as the absence of a prior public market, unseasoned trading, the small number of shares available for trading and limited information about the issuer. The purchase of IPO shares may involve high transaction costs. IPO shares are subject to market risk and liquidity risk. The Fund is a recently organized investment company with no operating history. The Fund invests in equity securities of SPACs, which raise assets to seek potential acquisition opportunities. Unless and until an acquisition is completed, a SPAC generally invests its assets in U.S. government securities, money market securities, and cash. Because SPACs have no operating history or ongoing business other than seeking acquisitions, the value of their securities is particularly dependent on the ability of the entity’s management to identify and complete a profitable acquisition. There is no guarantee that the SPACs in which the Fund invests will complete an acquisition or that any acquisitions that are completed will be profitable. Public stockholders of SPACs may not be afforded a meaningful opportunity to vote on a proposed initial business combination because certain stockholders, including stockholders affiliated with the management of the SPAC, may have sufficient voting power, and a financial incentive, to approve such a transaction without support from public stockholders. As a result, a SPAC may complete a business combination even though a majority of its public stockholders do not support such a combination. Some SPACs may pursue acquisitions only within certain industries or regions, which may increase the volatility of their prices.

Distributor: Foreside Fund Services, LLC.

 

CHAT

Investors should consider the investment objectives, risk, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about Roundhill ETFs please call 1-855-561-5728 or visit the website at www.roundhillinvestments.com/etf/. Read the prospectus or summary prospectus carefully before investing.

Artificial Intelligence Company Risk. Companies involved in, or exposed to, artificial intelligence related businesses may have limited product lines, markets, financial resources or personnel. These companies face intense competition and potentially rapid product obsolescence, and many depend significantly on retaining and growing the consumer base of their respective products and services. Technology Sector Risk. The Fund will invest substantially in companies in the information technology sector, and therefore the performance of the Fund could be negatively impacted by events affecting this sector. Market or economic factors impacting technology companies and companies that rely heavily on technological advances could have a significant effect on the value of the Fund’s investments. The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation and competition, both domestically and internationally, including competition from foreign competitors with lower production costs. New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions. Small-Capitalization Investing. The securities of small-capitalization companies may be more vulnerable to adverse issuer, market, political, or economic developments than securities of large- or mid-capitalization companies. The securities of small capitalization companies generally trade in lower volumes and are subject to greater and more unpredictable price changes than large- or mid-capitalization stocks or the stock market as a whole. Micro-Capitalization Investing. Micro-capitalization companies often have limited product lines, narrower markets for their goods and/or services and more limited managerial and financial resources than larger, more established companies, including companies which are considered small- or mid-capitalization. Concentration Risk. The Fund will be concentrated in securities of issuers having their principal business activities in the technology group of industries. To the extent that the Fund concentrates in a group of industries, it will be subject to the risk that economic, political, or other conditions that have a negative effect on that group of industries will negatively impact them to a greater extent than if its assets were invested in a wider variety of industries.

Distributor: Foreside Fund Services, LLC.

 

NERD

Carefully consider the Fund's investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund's prospectus. Read the prospectus carefully before investing. For a prospectus or summary prospectus with this and
other information about Roundhill ETFs please call 1-855-561-5728 or visit the
website at www.roundhillinvestments.com/etf/.

Investing involves risk, including possible loss of principal. Video game companies face intense competition, both domestically and internationally, may have limited product lines, markets, financial resources, or personnel, may have products that face rapid obsolescence, and are heavily dependent on the protection of patent and intellectual property rights. Such factors may adversely affect the profitability and value of video gaming companies. Investments made in small and mid-capitalization companies may be more volatile and less liquid due to limited resources or product lines and more sensitive to economic factors. Fund investments will be concentrated in an industry or group of industries, and the value of Fund shares may rise and fall more than more diversified funds. Foreign investing involves social and political instability, market illiquidity, exchange-rate fluctuation, high volatility and limited regulation risks. Emerging markets involve different and greater risks, as they are smaller, less liquid and more volatile than more develop countries. Depositary Receipts involve risks similar to those associated with investments in foreign securities, but may not provide a return that corresponds precisely with that of the underlying shares. Please see the prospectus for details of these and other risks.

Distributor: Foreside Fund Services, LLC.

 

LUXX

Investors should consider the investment objectives, risk, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the LUXX ETF please call 1-877-220-7649 or visit the website at https:// www.roundhillinvestments.com/etf/LUXX/. Read the prospectus or summary prospectus carefully before investing.

Investing involves risk, including possible loss of principal. Luxury companies face intense competition, both domestically and internationally, may have products that face rapid obsolescence, and are heavily dependent on the protection of patent and intellectual property rights. Such factors may adversely affect the profitability and value of luxury goods companies. Investments made in small and mid-capitalization companies may be more volatile and less liquid due to limited resources or product lines and more sensitive to economic factors. Fund investments will be concentrated in an industry or group of industries, and the value of Fund shares may risk and fall more than diversified funds. Foreign investing involves social and political instability, market illiquidity, exchange-rate fluctuation, high volatility and limited regulation risks. Emerging markets may be more volatile and less liquid than more developed markets and therefore may involve greater risks. Depository Receipts involve risks similar to those associated investments in foreign securities, but may not provide a return that corresponds precisely with that of the underlying shares. The fund is passively managed and attempts to mirror the composition and performance of the S&P® Global Luxury Index. The Fund’s returns may not match due to expenses incurred by the Fund or lack of precise correlation with the index. Please see the prospectus for details of these and other risks.

Roundhill Financial Inc. serves as the investment advisor. The Funds are distributed by Foreside Fund Services, LLC which is not affiliated with Roundhill Financial Inc., U.S. Bank, or any of their affiliates.

The “S&P® Global Luxury Index” is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by Roundhill Investments Inc. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Roundhill Investments Inc. The Roundhill S&P® Global Luxury ETF is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P® Global Luxury Index.

Distributor: Foreside Fund Services, LLC.

 

WEED

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the WEED Cannabis ETF please call 1-855-561-5728 or visit the website at https://www.roundhillinvestments.com/etf/WEED. Read the prospectus or summary prospectus carefully before investing.

The statements and forecasts above are subject to significant business, economic, and competitive uncertainties. Accordingly, there can be no assurance that such statements, estimates and projections will be realized, and no representations are made as to the accuracy or completeness of such statements and forecasts. Such statements and forecasts are not indicative of future investment performance. ETF characteristics and allocations are subject to change at any time.

Investing involves risk, including possible loss of principal.

Because the Fund is “non-diversified,” it may invest a greater percentage of its assets in the securities of a single issuer or a lesser number of issuers than if it was a diversified fund. As a result, the Fund may be more exposed to the risks associated with and developments affecting an individual issuer or a lesser number of issuers than a fund that invests more widely. This may increase the Fund’s volatility and cause the performance of a relatively small number of issuers to have a greater impact on the Fund’s performance.

Companies involved in the cannabis industry face intense competition, may have limited access to the services of banks, may have substantial burdens on company resources due to litigation, complaints or enforcement actions, and are heavily dependent on receiving necessary permits and authorizations to engage in medical cannabis research or to otherwise cultivate, possess or distribute cannabis. Since the cultivation, possession, and distribution of cannabis can be illegal under United States federal law under certain circumstances, federally regulated banking institutions may be unwilling to make financial services available to growers and sellers of cannabis.

Cannabis-related companies are subject to various laws and regulations that may differ at the state/local and federal level. Laws and regulations related to the possession, use (medical or recreational), sale, transport and cultivation of marijuana vary throughout the world, and the Fund will only invest in non-U.S. Cannabis Companies if such companies are operating legally in the relevant jurisdiction. These laws and regulations may (i) significantly affect a cannabis-related company’s ability to secure financing, (ii) impact the market for marijuana industry sales and services, and (iii) set limitations on marijuana use, production, transportation, and storage.

In addition, cannabis-related companies are subject to the risks associated with the greater agricultural industry, including changes to or trends that affect commodity prices, labor costs, weather conditions, and laws and regulations related to environmental protection, health and safety. Cannabis-related companies may also be subject to risks associated with the biotechnology and pharmaceutical industries. These risks include increased government regulation, the use and enforcement of intellectual property rights and patents, technological change and obsolescence, product liability lawsuits, and the risk that research and development may not necessarily lead to commercially successful products.

As an ETF, the fund may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Due to the costs of buying or selling Shares, including brokerage commissions imposed by brokers and bid/ask spreads, frequent trading of Shares may significantly reduce investment results and an investment in Shares may not be advisable for investors who anticipate regularly making small investments.

The Fund is a recently organized investment company with no operating history. Please see the prospectus for details of these and other risks.

Fund is distributed by Foreside Fund Services, LLC.
Foreside Fund Services and Roundhill Investments are unaffiliated companies.

 

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Carefully consider the investment objectives, risks, charges and expenses of Roundhill ETFs before investing. This and other information about each fund is contained in the Prospectus. Please read the prospectus carefully before investing as it explains the risks associated with investing in the ETFs.

These include risks related to investments in small and mid-capitalization companies, which may be more volatile and less liquid due to limited resources or product lines and more sensitive to economic factors. Funds investments may be non-diversified, meaning its assets may be concentrated in fewer individual holdings than a diversified fund and, therefore, more exposed to individual stock volatility than diversified funds. Investments in foreign securities involves social and political instability, market illiquidity, exchange-rate fluctuation, high volatility and limited regulation risks. Emerging markets involve different and greater risks, as they are smaller, less liquid and more volatile than more develop countries. Depositary Receipts involve risks similar to those associated with investments in foreign securities, but may not provide a return that corresponds precisely with that of the underlying shares. All investing involves risk, including possible loss of principal. Please see the prospectus for specific risks related to each fund.

NERD, BETZ, METV, BYTE, MEME, WEED, CHAT, BIGB, MAGS, LUXX and KNGS are distributed by Foreside Fund Services, LLC. DEEP is distributed by Quasar Distributors, LLC.

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