What Is a Gaming Industry ETF?

Gaming industry ETFs are exchange-traded funds that invest in casino and sports betting companies for the purpose of generating returns that match an underlying index. 

Gaming funds track companies involved with cas💟ino and sports gambling, but can also include🎉 video games and similar forms of electronic entertainment.

Understanding a Gaming Industry ETF

ETFs are a basket of 澳洲幸运5官方开奖结果体彩网:securities that can be actively managed or track an underlying index. They are similar to 澳洲幸运5官方开奖结果体彩网:mutual funds, but listed on exchanges and t🐼♐rade throughout the day like stocks.

ETFs aim to replicate the returns of a broad market index such as the 澳洲幸运5官方开奖结果体彩网:S&P 500 Index, or they can follow specific sectors such as health care, commodities, or in this case gaming, by tracking a relevant industry index. Gaming ETFs invest solely in companies that generate revenue from gaming. This generally means sports and casino gaꦕmbling♉, but can also mean video games and related entertainment.

The fortunes of gaming industry ETFs hinge largely on the health of the economy and consumer 澳洲幸运5官方开奖结果体彩网:discretionary spending. When times are good, consumers can afford to splurge on entertainment such as casinos and sports betting. But when💙 times are bad, they typically refrain from nonessential spending.

Examples of Gaming Industry ETFs

The VanEck Video Gaming and eSports ETF (ESPO) is one of the largest gaming industry ETFs, with over $250 million in 澳洲幸运5官方开奖结果体彩网:assets under management as of December 2023. This thematic fund tracks companies in the business of video gaming and eSports, such as Nintendo (NTDOY) and Roblox (RBLX). It also includes electronics and chip manufacturers, like Nvidia (NVDA) and Advanced Micro Devices (AMD).

Gaming ETFs may also invest in sports and other types of gambling. The VanEck Gaming ETF (BJK) has roughly $46 million under management, with investments in 澳洲幸运5官方开奖结果体彩网:casinos and casino hotels, sports betting, lotteries, gaming services, gaming technology, and gaming equipment.

As of December 2023, the VanEck Gaming ETF held shares in 33 companies. Its holdings included VICI Properties (VICI), a real estate investment trust that owns casinos in Las Vegas; Flutter Entertainment (FLTR), an Irish bookkeeper based in Dublin; and Las Vegas Sands (LVS), a casino and resort company operating in Las Vegas and Macau. 

Benefits of a Gaming Industry ETF

澳洲幸运5官方开奖结果体彩网:Gaming industry ETFs generally 🃏offer investors the same benefits as broad market ETFs such as low expense ratios, decent liquidity, flexibility, and tax efficiency. They are traded on major national exchanges an🍬d can be sold short or bought on margin.

Investors who want exposure to the gaming sector might consider a gaming ETF rather than putting all their eggs in one basket. However, while ETFs are associated with lower risks and volatility compared with individual stocks, investors should still 澳洲幸运5官方开奖结果体彩网:perfo﷽rm due diligence before buying.

Special Considerations

The goal and function of each ETF, together with the constituents of the benchmarks they track, should be scrutinized to verify they match an individual's investment goals. Costs should be calculated to ensure they don't eat into returns. Though ETFs are considered less expensive than mutual funds, some come with exorbitantly high fees.

Investors should also consider the state of the economy before throwing their support behind the gaming sector. The global lockdowns in 2020 to curtail the spread of the pandemic hit broad swathes of the economy, and casinos and resorts were no exception. In addition, consumers tend to cut back on discretionary spending when 澳洲幸运5官方开奖结果体彩网:disposable income dwindles.

Finally, investors should pay careful attention to conditions and developments in Las Vegas and Macau, two cities where many listed casino companies generate a large portion of revenue. For example, Macau primarily relies on visitors from mainland China. In 2014, China changed its travel rules so that mainland Chinese visiting Macau could only stay for five days, down from seven previously. Share prices of Macau casino opꦅerators fell following the announcement.

The Bottom Line

A gaming industry ETF is a fund that provides exposure to compan𝔉ies involved in casinos, gambling, sports betting, or other aspects of the gaming economy. These funds allow investors to gain exposure to the wider gambling industry, witho🅺ut having to buy shares in specific companies.