Gamers around the world eagerly await the launch of the next generation of consoles from Microsoft (NASDAQ 🙂 and Sony (NYSE 🙂 .
The hype surrounding the new consoles is building with the launch of Microsoft & # 39; s Xbox Series X and Series S on November 10th and Sony & # 39; s PlayStation 5 on November 12th.
The last console wars have focused on the growing demand for video games and eSports, especially given the impact of the coronavirus pandemic.
Today we look at one thematic exchange-traded fund (ETFs) to invest in the industry:
Despite the pandemic, the game is on
Many analysts agree that the video game industry and eSports are a long-term growth opportunity. This year's “stay at home, work from home” trend has clearly sparked the industry's head as lockdowns have resulted in increased engagement in video games and eSports. The video games market is currently worth more than $ 60 billion in the US and nearly $ 160 billion worldwide.
In eSports, both professional and amateur players compete in tournaments and fans watch them play competitively too. The global audience and revenue is nearly 500 million people and $ 1 billion, respectively.
Video game stocks, such as Activision Blizzard (NASDAQ :), Electronic Arts (NASDAQ :), Nintendo (OTC :), Take-Two (NASDAQ 🙂 and Tencent Holdings (OTC :), initially saw their stock prices fall in March. But since then, the industry has made a remarkable comeback. Let's take a closer look at an ETF positioned to win:
Wedbush ETFMG Video Game Tech ETF
Current Price: $ 67.48
52 Week Range: $ 35.50 – $ 70.63
Dividend Yield: 0.79%
Expense Ratio: 0.75%
The Wedbush ETFMG Video Game Tech ETF (NYSE 🙂 provides exposure to a range of global companies, including video game developers, consoles, chip manufacturers and game retailers. The fund started trading in 2016.
GAMR, which has 89 companies, follows the. The fund is rebalanced every quarter and the top ten companies represent approximately 22% of the net assets of $ 126.5 million. In other words, the weighting of individual stocks is not large enough to influence the value of the fund itself. About a quarter of the companies come from the US, followed by, among others, Japan (17.6%), South Korea (15.9%), China (11.4%) and Sweden (8.4%).
Some of the largest stocks in this fund are computer peripherals and hardware company Corsair Gaming (NASDAQ 🙂 and game maker Unity Software (NYSE :), both of which went public in September. Additionally, gaming hardware vendor Razer (OTC :), video game developer Gravity (NASDAQ :), and online video game publisher Nexon (OTC: NEXOF) top the list of stocks in the fund.
Since the beginning of the year, the GAMR is up more than 50%, hitting a record high of $ 70.63 on September 2. Given the volatility seen during this earnings season leading up to the US presidential election, it is likely that profits will be taken in the short term in the stocks that make up the fund. A possible decline towards the USD 60 level would make GAMR's risk / reward profile more attractive.
Bottom Line
The growth of video games shows that the industry is not just a hobby for a small group of young people or consumers who are young at heart. The viewership and fan culture surrounding these games also underline that eSports is likely to continue to grow in the next decade as well.
Another thematic fund in the industry is the VanEck Vectors Video Gaming and eSports (NYSE 🙂 which provides access to companies focused on the development of video games and eSports, as well as related hardware and software. It started trading in 2018 and has 25 positions. So far in the year, ESPO is up 60% and also hit a record high on September 2
In previous articles we looked at the growth of the industry and at two other exchange-traded funds (ETFs), namely the Global X Video Games & Esports ETF (NASDAQ 🙂 – covered and the Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSE 🙂 – covered. Readers may also want to keep this money on their radar.
Other funds also provide indirect access to various companies involved in video games and eSports. They include,
Global X Social Media ETF (NASDAQ 🙂
First Trust Cloud Computing ETF (NASDAQ 🙂
iShares Expanded Tech-Software Sector ETF (NYSE 🙂
