The VanEck Vectors Video Gaming and eSports ETF (NASDAQ: ESPO) is among the video game and esports ETFs reaching next level status this year and the good news is the fund’s success is rooted in credible fundamentals.
ESPO seeks to track the performance of the MVIS Global Video Gaming and eSports Index (MVESPO). The index is a rules-based, modified capitalization-weighted, float-adjusted index intended to give investors a means of tracking the overall performance of companies involved in video gaming and eSports
Esports is proving to be a growing trend, not a fly by night fad and the coronavirus pandemic is highlighting the utility and viability of the ESPO investment thesis.
“Esports viewership continues to grow and set new records, driven in part by the rising population of digital natives. An eNASCAR race broadcast on Fox and Fox Sports 1 on March 29, 2020, drew over 1.3 million viewers, making it the most-watched broadcast TV esports event in history,” said VanEck in a recent note.
ESPO Comes of Age
It’s no secret anymore that gaming, or esports, is big business and that trend should continue in 2020. That said, investors should keep gaming-focused ETFs on their watch lists for the new year. Importantly, video game equities have a reputation for performing well after the past instances of virus situations comparable to COVID-19.
“Video game revenues have been growing consistently in recent years, and with the help of technological innovation, video game publishers have diversified their revenue streams. Notably, the rise of the ‘game as a service’ model has helped extend the revenue lifecycle of games,” notes VanEck.
Esport is making audiences aware of the increased amount of video game engagement across various gaming platforms, streaming services, and now eSports. Esports is particularly notable given how traditional sports have all been canceled. As a result, many athletes, as well as consumers, have transferred over to eSports.
“Video games and esports stocks are uniquely positioned for the current market as shelter-in-place orders remain in effect. Across the industry, analysts have noted a sharp increase in video game and esports engagement, from people playing games to viewership numbers,” notes VanEck.
Year-to-date, investors added $214 million to ESPO.
For more on tactical strategies, please visit our Tactical Investing Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
