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Gaming Industry ETF

Gaming Industry ETF
InvestingEtfs

What Is a Gaming Industry ETF?

Gaming industry ETFs are exchange-traded funds that invest in casino and sports betting companies to produce returns equivalent to an underlying index. Gaming funds track companies engaged with casino and sports gambling, yet can likewise incorporate video games and comparative forms of electronic amusement.

Grasping a Gaming Industry ETF

ETFs are a basket of securities that can be actively managed or track an underlying index. They are like mutual funds, yet listed on exchanges and trade over the course of the day like stocks.

ETFs aim to duplicate the returns of a broad market index like the S&P 500 Index, or they can follow specific sectors like healthcare, commodities or in this case gaming, by tracking an important industry index. Gaming ETFs invest exclusively in companies that create revenue from gaming. This generally means sports and casino gambling, yet can likewise mean video games and related amusement.

The fortunes of gaming industry ETFs pivot largely on the soundness of the economy and consumer discretionary spending. At the point when times are great, consumers can stand to go overboard on diversion, for example, casinos and sports betting. Be that as it may, when times are awful, they ordinarily abstain from unnecessary spending.

Instances of Gaming Industry ETFs

The VanEck Vectors Gaming ETF (BJK) is one of the largest gaming ETFs with generally $74 million in assets under management as of December 2020. This topical fund tries to imitate the price and yield performance of the MVIS Global Gaming Index, which is made out of companies associated with casinos and casino inns, sports betting, lotteries, gaming services, gaming technology, and gaming equipment.

As of December 2020, the VanEck Vectors Gaming ETF held shares in 41 companies. Its top holdings included Irish bookmaker Flutter Entertainment; dream endlessly sports book operator DraftKings (DKNG); Galaxy Entertainment Group, a Hong Kong-listed owner of lodgings and casinos in Macau; and Las Vegas Sands (LVS), a casino and resort company operating in Las Vegas and Macau.

$565 billion

Estimated size of the global gambling market in 2022.

Gaming industry ETFs sometimes allude to video games and eSports. ETFMG, which depicts itself as a provider of topical ETFs, sent off the Wedbush ETFMG Video Game Tech ETF (GAMR) in March 2016. This fund tracks the EEFund Video Game Tech Index, which is made out of companies associated with video game technology, game development, control center and chip manufacturing, and game retailers.

As of September 2020, the fund held $121.7 million in assets under management. Top holdings included Corsair Gaming (CRSR), a maker of hardware peripherals like headsets and computer mice; Unity Software (U), which makes video game and virtual reality delivering motors; and Zynga (ZNGA), a social and mobile game designer.

Benefits of a Gaming Industry ETF

Gaming industry ETFs generally offer investors similar benefits as broad market ETFs like low expense ratios, respectable liquidity, flexibility, and tax proficiency. They are traded on major national exchanges and can be sold short or bought on margin.

Investors who need exposure to the gaming sector should seriously mull over a gaming ETF as opposed to tying up their resources in one place. In any case, while ETFs are associated with lower risks and volatility compared with individual stocks, investors ought to in any case perform due diligence before buying.

Special Considerations

The goal and function of every ETF, along with the constituents of the benchmarks they track, ought to be investigated to confirm they match an individual's investment goals. Costs ought to be calculated to guarantee they don't eat into returns. However ETFs are thought of as more affordable than mutual funds, some accompany extremely high fees.

Investors ought to likewise consider the state of the economy before advocating the gaming sector. The global lockdowns in 2020 to diminish the spread of the pandemic hit broad wraps of the economy, and casinos and resorts were no exception. Furthermore, consumers will generally cut back on discretionary spending when disposable income wanes.

At long last, investors ought to pay careful regard for conditions and developments in Las Vegas and Macau, two urban communities where many listed casino companies create a large portion of revenue. For instance, Macau essentially depends on guests from central area China. In 2014, China changed its movement rules so central area Chinese visiting Macau could remain for five days, down from seven already. Share prices of Macau casino operators fell following the announcement.

For related perusing, see Top Casino Stocks.

Highlights

  • Gaming Industry ETFs track companies engaged with casino and sports gambling, however can likewise incorporate video games and comparable forms of electronic amusement.
  • Casino and gambling companies are largely dependent on robust consumer discretionary spending.
  • The VanEck Vectors Gaming ETF invests in companies engaged with casinos and casino lodgings, sports betting, lotteries, gaming services, gaming technology, and gaming equipment.
  • However gaming industry ETFs offer investors lower fees and advantageous trading, they ought to in any case perform due diligence.
  • The Wedbush ETFMG Video Game Tech ETF invests in companies engaged with video gaming, like engineers and hardware makers.