COVID-19 has affected different sectors in different ways. The pandemic has dramatically increased the number of people staying at home and working from home, as social restrictions were introduced to slow the spread of the virus. Equities exposed to these trends have posted strong returns.
Today we’ll talk about two exchange-traded funds (ETFs) that focus on esports and video games, two sectors that have seen positive gains during the coronavirus pandemic.
Mordor Intelligence figures suggest it:
“The global gaming market was valued at US $ 162.32 billion in 2020 and is expected to reach a value of US $ 295.63 billion by 2026, registering a CAGR of 10.5% over the forecast period ( 2021 – 2026) … Electronic sports are experiencing significant demand in the current market scenario, and hence are driving the entire gaming industry globally. “
In the field of electronic sports, video game players around the world compete in championships. For example, the League of Legends World Championship by Riot Games is currently one of the biggest tournaments in esports, where the prizes can be substantial. China tops the list of countries with the highest incomes in this sector.
According to Activision Blizzard Inc (NASDAQ :), one of the big names in gaming and interactive entertainment:
“Esports will compete with the biggest traditional sports leagues in terms of future opportunities, and between advertising, ticket sales, licensing, sponsorship and merchandising there are huge areas of growth for this nascent industry. “.
Let’s take a closer look with two ETFs.
1. VanEck Vectors Video Gaming and eSports ETF
- Current price: $ 72.50
- 52 week range: $ 31.00 – $ 81.39
- Dividend yield: 0.11
- Fee: 0.55% per year
The VanEck Vectors Video Gaming and eSports (NYSE :) provides access to businesses that are part of the development space for video games, mobile games, e-sports, and related hardware and software.
ESPO, which tracks the MVIS Global Video Gaming and eSports Index, has 25 entries. Since its inception in October 2018, assets have grown by nearly $ 900 million.
Over 36% of companies are from the United States, followed by China (23.13%), Japan (19.40%), Taiwan (7.99%), South Korea (5.54%) %) and other countries. Communication services (75.0%), information technology (21.1%) and consumer discretionary (4.0%) are the three sectors of the ETF. Almost 62% of the fund is in the top ten stocks.
Chinese group Tencent Holdings Ltd (HK :) and games and internet company Bilibili Inc (NASDAQ :), California semiconductor giant NVIDIA Corporation (NASDAQ :) and Advanced Micro Devices Inc (NASDAQ :) and Topping the list is Sea Ltd (NYSE :), whose platforms span e-commerce, digital entertainment, and financial services.
Since the start of the year, the fund is up more than 6% and hit a record high in February. And investors who subscribed to the fund a year ago have seen returns of over 87%.
Hopes of economic openness are growing in the coming weeks, which could cause stocks to shift to other sectors of the economy. Any potential drop, especially below $ 70, would give investors a better entry point into the ETF.
2. Roundhill BITKRAFT Esports & Digital Entertainment ETF
- Current price: $ 34.42
- 52 week range: $ 11.91 – $ 39.38
- Dividend yield: 0.28%
- Fee: 0.50%.
The Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSE :) also focuses on e-sports and gaming. Entries range from streaming network operators to video game publishers, video game tournament and league operators as well as competition team owners.
The NERD, which tracks the Roundhill BITKRAFT Esports Index, has 32 stocks. The main sectors are games (38.5%), computer hardware (29.0%) and media (23.6%).
More than a quarter of businesses are from the United States. Next come companies based in China (22.6%), followed by South Korea, Sweden, Singapore and Japan.
The top 10 names account for over 45% of NERD’s net assets, which amounts to approximately $ 130 million. HUYA Inc (NYSE :), DouYu International Holdings (NASDAQ :), Modern Times (ST :), Tencent Holdings and Activision Blizzard systems top the list of current holdings.
Since the start of the year, the NERD has increased by around 17% and hit a record high in February. Over the past 52 weeks, the fund has returned 126%. Investors who believe that games and esports represent a long-term opportunity might consider buying the dips, especially if the price gets closer to $ 32.