Can Console Debuts Spur More Demand for Gaming ETFs?

The Covid-19 pandemic put gaming further into the spotlight as social distancing measures forced gamers to keep their consoles fired up to pass the time away. With the holidays just around the corner, new consoles will come to the market, which should help spur demand for gaming exchange-traded funds (ETFs).

“With pre-orders for Sony Corp.’s PlayStation 5 and Microsoft Corp.’s Xbox X Series sold out almost everywhere before their November release, video-game ETFs are ripe for a boom,” a Bloomberg article said.

The report also noted further that “supply-chain constraints coupled with high demand shows ‘this console cycle is going to benefit mostly all of the video game companies,’ according to Pedro Palandrani, an analyst at Global X Management Company LLC. HERO, an exchange-traded fund managed by Global X, has surged almost 70% this year. But the recent volatility and sideways-trading over the past month or so suggest there needs to be a new catalyst to extend the rally.”
“We’re going to see renewed interested in the industry,” said Palandrani, “As we get more sales reports of these video game” consoles and their accessories.

If sales figures for these new consoles meet or exceed expectations, keep an eye out for gaming ETFs like the VanEck Vectors Video Gaming and eSports ETF (NasdaqGM: ESPO). ESPO tracks the performance of the global video gaming and eSports (also known as electronic sports) segment.

ESPO Chart

ESPO data by YCharts

A couple more gaming ETFs to consider along with ESPO include:

  • VanEck Vectors Gaming ETF (NasdaqGM: BJK): BJK is runner up in terms of size with over $27 million in assets. The fund seeks to replicate as closely as possible the price and yield performance of the MVIS® Global Gaming Index. For index eligibility, companies must generate at least 50% of their revenues from gaming. Gaming includes casinos and casino hotels, sports betting (including internet gambling and racetracks) and lottery services as well as gaming services, gaming technology and gaming equipment.
  • Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSEArca: NERD): NERD doesn’t have the asset size of the first two funds, but it’s still worth a look given its current price of $15.74 as of Dec. 18. It seeks to track the total return performance of the Roundhill BITKRAFT Esports Index, which tracks the performance of the common stock of exchange-listed companies across the globe that earn revenue from electronic sports, or esports related business activities.


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