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Capture the eSports Craze with this ETF

In this episode of ETF Spotlight, I talk with Ed Lopez, Head of ETF Product, and John Patrick Lee, Associate Product Manager, at VanEck.

We discuss the VanEck Vectors Video Gaming and eSports ETF ESPO, which made its debut in October last year.

The video game industry is disrupting traditional media and entertainment,” per VanEck, “and with a young and highly engaged demographic, ESPO provides investors access to what we believe can be a long-term growth story.”

To start off, Ed explains why VanEck decided to launch ESPO. We also discuss the market, recent growth trends and why some experts say that eSports are the next big thing in sports.

While some may think of video gaming as a living room hobby, it is now more about team-based games and tournaments that are live streamed and watched by millions of people online and also in arenas.

The video gaming industry now generates more than $100 billion of revenue annually. And while eSports are currently a small part of this huge industry, they are growing exponentially. With a young and affluent audience, these growth trends are expected to continue over the long-term.

The majority of revenue comes from corporate sponsorships with additional revenue streams from game publisher fees, media rights, ticket sales and merchandise.

Why should investors invest in this fast-growing space?

ESPO holds global companies involved in video gaming and eSports. We discuss how constituents are selected and weighted in the index.

Video game developers like Take-Two Interactive Software TTWO, Electronic Arts EA,  Activision Blizzard ATVI, Nintendo NTDOY are among the top holdings along with chipmakers like NVIDIA NVDA and Advanced Micro Devices AMD.

To be included in the index, companies must generate at least 50% of their revenues from video gaming or eSports, and that’s why we do not see companies like Microsoft MSFT and Amazon AMZN among the holdings.

ESPO is not the only video game ETF available to investors. How is this ETF different from the ETFMG Video Game Tech ETF GAMR?

We also talk about the proposed VanEck bitcoin ETF, which some experts say has the best chance of being approved by the SEC. Will we see a bitcoin ETF in 2019?

Please visit VanEck.com if you want to learn more about this ETF. Make sure to be on the lookout for the next edition of ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.

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