Photo credit: Global X ETFs
Previously on investing in esports which we covered on our website, we talked about a number of stocks to consider which included esports stocks, esports related stocks, and exchange-traded funds (or ETFs). We went further into esports stocks where we highlighted companies such as Microsoft Activision all the way to Zynga Inc with their respective market caps and associated games. This time we would like to talk more about the ETFs, which is also a stock that is on the rise as well.
Exchange-traded funds (ETFs), are a type of investment security that operate much like mutual funds but can be used to track indexes, commodities, sectors or other assets. So rather than only one asset, you are looking at multiple underlying assets. They are called exchange-traded because they are traded on an exchange like stocks are, with price shares changing throughout the day as they are being bought and sold on the market. Mutual funds on the hand do not trade on an exchange, and they trade only once a day after the market closes.
Gaming ETFs were initially focused on casino and gambling companies, but with the widespread and growth of spectator entertainment (i.e. eSports), they have gotten into these spaces to own stocks of companies into video games and esports. Below are ETFs specifically dedicated to companies in the video game/esports industry:
Photo credit: Business Wire
Wedbush ETFMG Video Game Tech ETF (GAMR)
GAMR (launched in 2016 by ETFMG) seeks to track the EEFund and Video Game Tech Index, with the fund’s portfolio covered by 30% from companies in the US, and the rest from companies in Japan and Korea. The fund includes companies that are interested in bringing gaming to your living room, publishers, gaming consoles and semiconductor manufacturers. GAMR’s holdings include GameStop Corp., Roblox Corp., and Unity Software Inc, with $65 million as AUM (assets under management).
Photo credit: Business Wire
VanEck Video Gaming and eSports ETF (ESPO)
ESPO (launched in 2018 by VanEck) tracks the MVIS Global Video Gaming and eSports Index – an index of companies involved in eSports, video game development and related hardware and software providers. US companies make up for 40% of the fund’s portfolio, followed by Japan and China. Companies in this index derive at least half of their total revenue from video game/eSports offerings. The top three holdings of ESPO are NVIDIA Corporation – graphics processing unit manufacturer, Advanced Micro Devices Inc. (AMD) – semiconductor manufacturer, and Activision Blizzard – video game developer and publisher. The assets under management (AUM) for ESPO is $340 million.
Photo credit: Interactive Brokers
Global X Video Games and Esports ETF (HERO)
This ETF provides exposure to companies that develop or publish video games, that are involved in content streaming and distribution, operate within eSports leagues or make hardware for the industry. The fund is focused on growth stocks across the market cap spectrum, with holdings in Roblox Corp., Unity Software Inc., and Take-Two Interactive Software. Over 92& of the fund’s holdings operate in the communication sector and the remainder in the information technology sector. The US, Japan and China make up the fund’s portfolio.
What is noteworthy with gaming ETFs is to be mindful of low assets under management (i.e. below $50 million), because that will mean an increase in losses or a negation in investment gains.
Esports has helped create jobs for lots of people. Interested in knowing about the business side of esports? Listen to the Gamers Change Lives Podcast! We get experienced guests from all around the world featuring.
Written by Jeffrey Osei-Agyeman