Interest in gaming and eSports is soaring, especially since more people are staying at home. Here we’ll check out the best gaming ETFs to get in on the action.
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Introduction – Why Gaming ETFs?
The gaming industry within the Consumer Discretionary and Communications sectors have outperformed the broader market over the past year. Interest in gaming and eSports has been soaring, especially with more people staying at home nowadays finding in-house entertainment. Moreover, the historical negative stereotype surrounding video gamers is dissipating, as eSports has emerged as a lucrative career option for the best of the best.
Whether you’re into gaming or not, it would be foolish to ignore the fact that it’s a burgeoning multibillion-dollar industry, primed to continue accelerating with the advent of things like cloud computing, virtual reality, smartphones, and tablets. Around 2.7 billion people around the world enjoy gaming. This number is expected to grow to 3 billion by 2023, with the market projected to exceed $200 billion.
Let’s explore the best gaming ETFs.
The 4 Best Gaming ETFs
The gaming ETFs below have varying scopes of exposure to eSports, video games, and their supporting technology.
HERO – Global X Video Games & Esports ETF
Global X has a solid track record with thematic ETFs. The Global X Video Games & Esports ETF (HERO) launched in late 2019 and has already amassed close to $1 billion in assets.
HERO provides exposure to companies involved in the development or publication of video games, streaming and distribution of video games, operation of eSports leagues, or production of video game hardware, including augmented and virtual reality. The fund screens for liquidity but does not have geographic constraints and is thus globally diversified.
HERO caps the weight of any individual holding to avoid concentration. Notable top 10 holdings include Activision Blizzard, NVIDIA, Electronic Arts (EA), Nintendo, and Zynga. This ETF has 40 holdings and an expense ratio of 0.50%
ESPO – VanEck Vectors Video Gaming and eSports
ESPO from VanEck seeks to track the MVIS Global Video Gaming and eSports Index. It should be considered largely comparable to HERO above. Their assets are almost identical. ESPO is slightly more expensive at 0.55%. ESPO could be considered less diversified. It has 25 holdings compared to 40 for HERO.
ESPO tilts more large cap than HERO. ESPO is also more concentrated in the United States at about 36%, compared to about 25% for HERO.
NERD – Roundhill BITKRAFT Esports & Digital Entertainment ETF
NERD was launched in mid-2019 but only has about $100 million in assets despite its being cheaper than others on this list with a fee of 0.25%. Similar to HERO and ESPO, NERD holds companies involved in eSports or related business activities, including video game publishing, development, streaming, leagues and tournaments, and gaming hardware and technology.
NERD is roughly equally weighted and has 31 holdings.
The fund uses an equal weighting methodology and has one of the lowest fees in this space at 0.45%. Unlike the previous funds, HAIL’s 60 holdings end up being pretty heavily concentrated in the United States at about 82%.
GAMR – Wedbush ETFMG Video Game Tech ETF
GAMR is similar to NERD with only about $100 million in assets. Technically GAMR is a more “pure play” on video game creators and supporters, and retailers, but it weirdly has about 1/4 of its holdings in GameStop. GAMR has 93 holdings and is the most expensive on the list with an expense ratio of 0.75%. I’d probably avoid this one, given the other options.
Where to Buy These Gaming ETFs
All these gaming ETFs should be available at any major broker. My choice is M1 Finance. The broker has zero trade commissions and zero account fees, and offers fractional shares, dynamic rebalancing, and a modern, user-friendly interface and mobile app. I wrote a comprehensive review of M1 Finance here.
Disclaimer: While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.