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  • Willing to bet that US banks are too big to fail? Does Roundhill have the ETF for you
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Roundhill Investments has launched a new exchange-traded fund (ETF) consisting of six “too big to fail” US bank stocks.

Roundhill is a registered investment adviser and ETF issuer offering thematic and sector-specific funds.

For example, the New York-based firm offers a sports betting ETF ($BETZ), which holds shares in more than 40 publicly traded sports betting and online gambling businesses including DraftKings, Flutter, Kindred, Penn Entertainment and Evolution.

The new “BIGB” big bank ETF is designed to provide “concentrated and cost-efficient exposure” to the US banking sector via shareholdings in JPMorgan Chase, Bank of America, Wells Fargo, Morgan Stanley, Goldman Sachs, and Citigroup. 

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The announcement comes in the wake of recent failures and collapses in the US banking sector including Silicon Valley Bank, Signature Bank of New York and Silvergate, following which many businesses and individuals have decided to move funds into larger and more stable banks.

Roundhill said that until now, investors have only been able to invest in financial ETFs tracking large and diversified baskets of companies across industries.

Now, it said investors can achieve more targeted and specific exposure to banking sector leaders while enjoying the cost and liquidity benefits of an ETF structure.

Roundhill Investments chief strategy officer Dave Mazza: “BIGB allows investors to achieve exposure to these money centre banks without the potential exposure to smaller financial services companies such as regional banks, brokerages, and insurance companies found in existing financial ETFs.”

BIGB launches with an all-in expense ratio of 0.29% and will use equal weighting, rebalance on a quarterly basis and reconstitute if applicable on an annual basis, Roundhill added.

“In the wake of banking failures at 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,” said Dave Mazza, Roundhill’s chief strategy officer.

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

US sports betting tracker

In a separate note, Roundhill’s online sports betting tracker suggests the US market reached a new all-time high in January, just before the Super Bowl.

The fund reported that January’s online handle surged to $9.1bn, up from $8.7bn in December 2022, with January results from Arizona still pending.

The report noted this was a significant milestone for sportsbooks as they aim to grow their businesses more profitably in 2023.

“If the market can downshift to a more sustainable pace of growth that is no longer fuelled by massive incentives, the sector will likely be on a better trajectory towards stable profitability as the market continues to expand,” Roundhill said.

While many of the bets were made on the Super Bowl, the report concluded that sequential and year-over-year growth in some of the largest states, including New York and Illinois, “supports the longer-term thesis around profitable growth”.

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