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For many investors looking to get started in a certain industry, Exchange-Traded Funds (ETFs) might be the right way to go. ETFs are typically seen as having less risk than traditional stocks but at the same time can have lower returns. An ETF is a basket of different investments grouped together into one fund; it is essentially buying smaller fractions of companies that are a part of that specific fund. It allows for more diversification, as well as the opportunity to invest into a group of stocks as opposed to picking specific individual ones.
In the gaming industry there are 4 main ETFs to look into: GAMR , ESPO , NERD , and HERO . Still considered by many to be an up and coming industry, especially in terms of investing within it, one or more of these ETFs might be a safe way to start. It gives an investor the opportunity to get their foot in the door of the industry, and then being able to dive into individual stocks once they have a stronger understanding of the gaming market.
GAMR
The Wedbush ETFMG Video Game Tech ETF: GAMR features holdings in over 90 different organizations that support, create, or use video games. Their stocks are separated into three different buckets; pure-play, non-pure-play, and conglomerate. The pure-play stocks are hardware and software game developers that generate their revenue solely on products in the gaming industry. Non-pure-play are the companies that support the pure-play organizations as they generate part of their revenue from the gaming industry but they do not only rely on it. Lastly, the conglomerate bucket is comprised of companies whose business models support the gaming industry. The first two buckets make up the majority of the ETF at 90% while the conglomerate bucket holds just 10%. GAMRs top holdings only account for roughly 21-22% of the total assets which makes this ETF safe as no individual stock has enough weight to bring down the entire fund. GAMR meets all the major global markets, with around 30-31% of their holdings in Asia, 25% in Asia-Pacific, 25% in North America, and 19% in Europe.
Some of their holdings:
- Bilibili Inc
- Codemasters Group Holdings
- GameStop Corp
- Keywords Studios
- Embracer Group
- Nintendo Co
- Capcom Co
- Corsair Gaming Inc
- Stillfront Group AB
- Gravity Co
ESPO
VanEck Vectors Video Gaming and Esports ETF: ESPO holds a portfolio made up of companies that are related specifically to video games and esports. All the organizations in the portfolio generate at least half of their revenue from the video game and esports industry, including; game development, software or hardware, and streaming services. They also have holdings in esports league operators, distributors, and platforms. Compared to GAMR, ESPO has a more concentrated group of holdings with only 26 total assets in its portfolio, with about 1/3 of them in North America, between 55-60% based out of Asia and Asia-Pacific, and lastly just over 10% from Europe.
Some of their holdings:
- NVIDIA Corp
- Tencent Holdings
- Advanced Micro Devices
- Bilibili Inc
- Sea Ltd
- Nintendo Co
- NetEase Inc
- Activision Blizzard
- Take-Two Interactive
- NEXON Co
NERD
Unlike the other ETFs listed, Roundhill BITKRAFT Esports & Digital Entertainment ETF: NERD focuses solely on esports, with its portfolio comprised of companies that generate revenue from esports or esports related business activities. Those include: video game publishing, video game development, video game streaming platforms, organizing video game tournaments and/or events, operating and/or owning video game leagues, owning competitive video game teams, and gaming hardware and technology companies. Similar to GAMR, the stocks in the portfolio have three different classifications: pure-play, core, and non-core. If you are looking to get involved in only esports compared to the rest of the gaming industry, NERD is a great place to start.
Some of their holdings:
- Corsair Gaming Inc
- Tencent Holdings
- HUYA Inc
- Activision Blizzard
- DouYu International Holdings
- Modern Times Group (MTG)
- Bilibili Inc
- Skillz Inc
- NetEase Inc
- AfreecaTV
HERO
The final ETF on our list, Global X Video Games & Esports ETF: HERO , is actually fairly similar to ESPO with its portfolio having holdings in stocks related to video games and esports. HEROs holdings are companies whose principal business functions have or are expected to have significant exposure to both the video games and esports industries. Like ESPO once again, the eligible companies must generate at least 50% of their revenue from video game or esports activities, on top of meeting minimum market-cap and liquidity requirements. Where HERO differs is that they have holdings in 41 companies, with a larger emphasis in the mobile games sector in terms of publishers and developers, which is the largest segment in the global games market.
Some of their holdings:
- Bilibili Inc
- Sea Ltd
- Nintendo Co
- NVIDIA Corp
- NetEase Inc
- Activision Blizzard
- Capcom Co
- NEXON Co
- Electronic Arts Inc
- Take-Two Interactive
