Revving the ETF vehicle: Roundhill’s CEO on DRAM, next-gen innovation and more

Funmi Osiyale (0:05)

The ETF industry has come a long way from traditional in-debt investing. Today, with more than $16 trillion in assets in the US ETF market, investors can access everything from thematic exposures, derivative-based products and increasingly sophisticated portfolio tools, all through the ETF wrapper.

At the same time, the pace of innovation continues to accelerate. New investment ideas are reaching the market faster than ever, and issuers are continually entering new frontiers of what can be delivered through an ETF.

Welcome to JPMorgan's Making Sense.

I'm Funmi Osiyale from JPMorgan's ETF sales team. Today, I'm joined by Dave Mazza, CEO of Roundhill Investments. Launched in 2018, Roundhill has emerged as an innovator in the ETF space, helping pioneer products designed around some of the biggest trends shaping markets today. From AI and semiconductors and the next generation of retail investing. Dave, thanks so much for being here today.

Dave Mazza (1:12)

Thanks for having me. It's great to be here.

Funmi Osiyale (1:14)

Many of our listeners will be familiar with Roundhill products. They'll have heard of Mags, DRAM, and have heard of Roundhill making its mark in the ETF industry. But can you take us back to the beginning? Tell us about Roundhill's origins and how you got to the firm that you are today.

Dave Mazza (1:29)

Yeah. I'm happy to do so. Roundhill was founded in 2018 by Will Hershey and Tim Maloney. They were actually in their late 20s at the time.

The impetus behind the firm was creating an asset manager that was really focused on the next generation of investors. Those are millennial investors, Gen Z investors.

Most people think that, well, that means it really is only about direct retail, but actually that's an important part of Roundhill's origin story and really our focus. But when you think about the de-aging of financial advice and the team building approach that financial advisors have and just as a new generation of portfolio managers come into the institutional side, the firm was well set up for that. I joined in 2023 really with an idea of helping take that vision and mission that Will and Tim set out to see if we could bring that to a larger pool of investors. And really since that time we've been proud of our accomplishments in being able to do so as the firm has expanded markedly over the past few years.

Funmi Osiyale (2:33)

Now moving on to Mags, that's a product that really put Roundhill on the map. Can you tell us about the original thesis behind this fund?

Dave Mazza (2:40)

Yes, it's interesting. So Mags is the Roundhill Magnificent 7 ETF. And this was the first ETF to provide precise exposure to the Magnificent 7 stocks. And it's funny, when I think about that ETF, when we first launched it, many people were pointing the fingers and saying, well, this is going to be the top of the market. This is going to be the end of the Magnificent 7 story.

And the term itself, and there's debate over who kind of first coined it, but at this point, I think the Magnificent 7 and the Mags are tied at the hip. And what's been interesting to me is really how fast some of the early adoption was. But what we heard from investors is that they were really interested in the precision that Mags could provide and allowing them to be able to make investment and trading decisions with greater certainty of that potential outcome, at least when it comes from the exposure point of view. So at the same time, Mags actually was one of the first ETFs to combine cash equities, so traditional stocks plus derivatives, in this case total returns flops to provide that exposure in a portfolio. So some of the benefits of Mags is not just that it's a highly liquid vehicle for investors looking to access exposure to those seven names, there is also some financial innovation behind it.

Funmi Osiyale (3:54)

Thanks so much for those insights. Now, what do you think was the inflection point for Roundhill? What took you from emerging issuer to becoming the firm that we see today?

Dave Mazza (4:03)

I think certainly the growth that we saw with Mags over the past few years really helped provide validation to the thesis that investors wanted that more precise exposure, more interested in ideas that could not just have the potential for them to outperform, should markets do well or the underlying exposures do well, but again, do so with greater certainty. But at the same time, Roundhill has expanded in what I call a new generation of thematics or precise industries, true actively managed DTS, and then income and other derivatives based products. So really everything we've been laying out in the areas that we participate in are all areas of growth and interest from investors, both large and small.