Why an Esports ETF is Your Best Bet for Cashing in on this Explosive Market

esports ETF

With the esports industry on-track to surpass $1 billion in revenue this year, many investors are keen to gain a slice of this lucrative market. But, with so many game publishers, gaming platforms and communities, hardware and software manufacturers, and tournament organizers to choose from, it can be difficult to pinpoint the best entry point into the market. Luckily, there are several esports ETFs that offer a bright spot in an otherwise volatile market.

Instead of putting all of your money into one esports stock, you can gain global exposure to the burgeoning video gaming industry through one of the following exchange-traded funds (ETFs).

VanEck Vectors Video Gaming and eSports ETF (NYSEARCA:ESPO)

The VanEck Vectors Video Gaming and eSports ETF (NYSEARCA:ESPO) is an esports ETF that provides targeted access to some of the largest companies involved in the gaming industry, resulting in a global portfolio with heavy representation in the US and Asia.

It seeks to replicate the MVIS Global Video Gaming and Esports Index, which is comprised of a globally diversified group of esports and video game companies, including those engaged in esports, video game development, and gaming hardware and software.

Some of its top holdings include Nvidia Corp. (NASDAQ:NVDA), Tencent Holdings Ltd. (OTCPK:TCTZF), Activision Blizzard (NASDAQ:ATVI), Nintendo (OTCPK:NTDOF), and Electronic Arts (NASDAQ:EA).

The VanEck Vectors Video Gaming and eSports ETF has $38.4 million in assets, an expense ratio of 0.55%, and is this year’s top-performing esports ETF, increasing by about 24% so far.

Defiance Next Gen Video Gaming ETF (NYSEARCA:VIDG)

Another esports ETF that has seen some major gains in 2019 is the Defiance Next Gen Video Gaming ETF (NYSEARCA:VIDG). The fund, which debuted in June, follows the BlueStar Next Gen Video Gaming Index and includes a range of esports and video game specialists, media companies, and hardware producers.

VIDG is perhaps the purest video game ETF, as over 76% of its holdings are video game publishers. Since its inception, this esports ETF has increased by nearly 18%. What’s more, with an expense ratio of only 0.33%, the Defiance Next Gen Video Gaming ETF is a cost-effective way to access the growing esports market.

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Evolve E-Gaming Index ETF (TSX:HERO)

The Evolve E-Gaming Index ETF (TSX:HERO) also debuted in June, becoming Canada’s first esports ETF. The fund tracks the Solactive Electronic Gaming Index, which measures the performance of game software providers, and is designed to provide access to equity securities of globally and domestically-listed companies in the e-gaming industry.

The Evolve E-Gaming Index ETF has 44 holdings, 82.92% of which are in the interactive home entertainment sector, including big names like Activision Blizzard, NetEase Inc. (NASDAQ:NTES), Nintendo, EA, Tencent, and Take-Two Interactive Software (NASDAQ:TTWO).

HERO is published in Canadian dollars and has $2.046 million in assets under management. So far this year, the fund has increased by 2.56%.

Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSEARCA:NERD)

The Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSEARCA:NERD) also launched this past June and offers an expense ratio at 0.25%, although this will increase to 0.50% after its first year. NERD was created through a partnership between Roundhill Investments and Bitkraft Esports Ventures after noticing the excitement around private markets in the esports space.

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The mid-cap fund holds 25 globally-listed stocks that are actively involved in the competitive gaming industry and have an average market value of $4.8 billion.

ETFMG Video Game Tech ETF (NYSEARCA:GAMR)

The ETFMG Video Game Tech ETF (NYSEARCA:GAMR) is the veteran gaming ETF, having been around since March 2016. This fund is the largest by roster with 86 holdings, although none exceed a weight of 3.64%.

The ETFMG Video Game Tech ETF tracks an equity index of global firms that create, support, or use video games, including Square Enix Holdings (OTCPK:SQNXF), Capcom Co. (OTCPK:CCOEY), and Activision Blizzard.

GAMR offers exposure to a wide selection of esports stocks and even includes tech companies like Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG), and Microsoft (NASDAQ:MSFT), which is rare for video game and esports ETFs.

iShares Evolved U.S. Media and Entertainment ETF (BATS: IEME)

Last, but not least is the iShares Evolved U.S. Media and Entertainment ETF (BATS: IEME). Although this fund isn’t technically a dedicated esports ETF, it does offer exposure to some of the biggest names in the industry, such as Activision Blizzard, Electronic Arts, and Take-Two Interactive Software.

The fund boasts 89 media and entertainment holdings, $5.24 million in net assets and an expense ratio of 0.18%. So far this year, IEME has gone up by 12.49%.

What really sets the iShares Evolved U.S. Media and Entertainment ETF apart from the rest is that the fund uses tools like artificial intelligence (AI), machine learning, and natural language processing.

If you are looking to gain exposure to the burgeoning esports industry, one of the aforementioned esports ETFs might be the best way to get in on the action while minimizing risk.

Are there any esports stocks on your radar? We would love to hear about them in the comments!

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