Roundhill Investments launches digital infrastructure ETF
Small thematic ETF specialist Roundhill is launching a digital infrastructure ETF.
The Roundhill IO Digital Infrastructure ETF (BYTE) invests in often-invisible companies that support the internet. These include fibre optic cable companies, data centre REITs, and mobile towers.
BYTE picks and weights stocks using three factors: growth, value, and most interestingly “soundness”—which tries to capture how well a company fits a theme. The index gives the highest priority to soundness and growth, meaning its after tech companies on growth multiples. Companies are ranked based on a composite score of the above factors.
Companies are selected firstly on a geographic basis. The fund takes on US companies until the they take 65% of the fund—broadly in line with the MSCI World Index. Top ranked companies from rich countries and then emerging markets are added until the fund hits 40 companies. The index committee is afforded a fair degree of oversight and latitude and can assess and adjust these limits and metrics. The top 10 holdings are below.
The fund charges 0.75%, in line with Roundhill’s other ETFs.
|
Weight |
Name |
Ticker |
|
6.9% |
LIBERTY GLOBAL PLC |
LBTYA |
|
6.7% |
UNITI GROUP LIMITE |
UWL AU |
|
6.4% |
CHARTER COMMUNICATIONS INC NEW CL A |
CHTR |
|
5.8% |
AMERICAN TOWER CORP |
AMT |
|
5.5% |
CABLE ONE INC |
CABO |
|
5.3% |
ALTICE USA INC |
ATUS |
|
4.9% |
LUMEN TECHNOLOGIES INC |
LUMN |
|
4.7% |
CROWN CASTLE INTL CORP NEW |
CCI |
|
4.2% |
SBA COMMUNICATIONS CORP NEW |
SBAC |
|
3.8% |
MEGACABLE HOLDINGS |
MEGACPO MM |
Bernie’s commentary – interesting idea
The internet as a theme has been harvested pretty much every which way by ETF providers. You have outright internet companies ETFs, semiconductors ETFs, video games, online shopping, fintech—I could go on all day. It’s interesting though that the companies that support data infrastructure have never quite got their own ETF. I think it’s potentially because of how geeky it is. (and coming from me that is saying something.)
Some of the companies in this fund I think could join that category of “most important companies you’ve never heard of”—like American Tower. They literally support the internet. Whereas others I think I’d be happy to take positions in myself – like Crown Castle International.
For me, what will be most interesting about this fund is whether it collects assets. Crucial though it is, digital infrastructure is not a facebook or reddit talking point. And yet that’s where the guts of the money is for these types of funds. I wish it all the best.