The Wedbush ETFMG Video Game Tech ETF (NYSEARCA: GAMR) tracks an equity index of global firms that support, create or use video games.
The stocks held in the portfolio are assigned to pure play, non-pure play or conglomerate baskets, and weighted equally within each. GAMR assigning stocks into various categories is a common allocation in exchange-traded funds (ETFs) with narrow themes.
The fund’s holdings can be divided into three categories, with the “pure-play bucket” holding hardware and software game developers, including virtual reality firms; the “non-pure-play bucket” is for stocks that support the pure-play firms with intellectual property (IP); and the “conglomerate bucket” features large stocks that more broadly support the video game space.
With the index provider making these assignments, GAMR is heavily weighted in the first two buckets that encompass 90% of its holdings and are apportioned by market-capitalization relative to the whole index. Conglomerates get just 10% which keeps big, diffuse names from dominating its overall holdings. Stocks within each individual bucket are equally weighted. The ETF charges a somewhat high fee, which is not unusual for narrow niche funds with little competition.
The ETF has had impressive returns for the last few years as the image below shows.
The fund has $132 million in assets under management, a 0.20% average spread and 91 holdings. Its expense ratio is 0.75%, meaning it is expensive to hold relative to other exchange-traded funds. With a yield of 0.58%, it last paid a dividend of $0.21 on Sept. 15. GAMR currently trades around $68.
To sum up, GAMR provides pure-play and diversified exposure to a dynamic intersection of technology and entertainment. It is the first ETF to target the video game technology industry. The video game industry has amassed more than one billion loyal users and influences many other tech industries such as virtual reality software and cloud-based services. The fund captures a $127 billion global industry, which according to etfmg.com, is estimated to grow 49% by 2025.
The ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the EEFund Video Game Tech Index. The index is designed to reflect the performance of companies involved in the video game technology industry, including game developers, console and chip manufacturers and game retailers.
This is a promising fund in a burgeoning market, however, please exercise your own due diligence in deciding whether or not this fund fits your individual investing and portfolio needs.
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.