Esports and gaming are one of the hottest market themes right now.
A number of different exchange-traded funds (ETFs) have cropped up to provide investors with a way to invest in a swath of companies in the area. One of these is Global X Video Games & Esports ETF (HERO).
The fund’s investments are in companies primarily or significantly invested in the video games and esports industries. Because of the nature of this requirement, companies such as Microsoft (MSFT), which has a large gaming arm but gets most of its revenue elsewhere, are not included. In addition, there is a market-cap requirement for inclusion in HERO. It is market-cap-weighted, so the largest companies will form a larger percentage of its portfolio.
This industry and fund have powered way ahead this year, possibly due in part to COVID-19 somewhat improving sales for gaming companies. HERO is up 72.75% this year, putting it substantially ahead of the similarly themed fund Wedbush ETFMG Video Game Tech ETF (GAMR) with its 59.25% gain and light years ahead of the S&P 500’s roughly 10% gain over the same period.
The expense ratio for this fund is 0.50%, and it pays a tiny yield of 0.15%. Assets under management total $367 million. The most recent three months also have been a strong period of performance for the fund, showing a gain of 10.2%.
Chart Courtesy of www.stockcharts.com
HERO currently has just 41 holdings, which are spread among a number of countries. The United States, Japan and China hold the largest shares, but the fund is diverse in terms of country distribution.
The top 10 holdings add up to 54% of the fund’s assets. They include Sea Ltd. (SE), 7.76%; Nintendo Co. Ltd., 6.56%; NVIDIA Corp. (NVDA), 6.54%; Activision Blizzard (ATVI), 5.15%; and NEXON Co. Ltd., 4.95%.
For investors looking to get into the world of gaming with a fund that has posted strong recent returns, Global X Video Games & Esports ETF (HERO) should receive strong consideration.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.