Technology has been a tried and true sector in the last decade’s bull run. ETF investors wondering whether the sector might be overheated can turn to more concentrated tech exposure in the gaming industry via the VanEck Vectors Gaming ETF (BJK).
The fund’s performance has been nothing short of astounding with a gain of over 140% the past year. So far in 2021, the fund is up 19%.
BJK seeks to replicate as closely as possible the price and yield performance of the MVIS® Global Gaming Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index.
To be initially eligible for the index, 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.
“This fund offers concentrated exposure to the global gaming industry, focusing in on casino operators but also holding technology firms and sports & race book operators as well,” an ETF Database analysis said. “Due to this focus, the fund holds many securities that are not widely represented in many standard portfolios, suggesting that it could open up new slices of the market for investment. Although it would make for a poor core holding, BJK could be appropriate for investors seeking greater exposure to the gaming industry at large.”
BJK gives investors access to:
- The Nation’s First ETF Focused on Global Gaming: An industry driven by a growing worldwide middle class with increased disposable income.
- A Pure Play with Global Scope: To be initially eligible, index constituents must be principally engaged in the global gaming industry, deriving greater than 50% of revenues from it.
A Reopening Play on Casinos
As the global vaccine rollout continues, a reopening trade could be brewing as casinos continue to reopen their doors. Even if this proves to be a slow process, online gaming is more than enough to stem the tide of a revenue drought.
“Online casinos have been growing in popularity well before the pandemic, but as billions of people spend more time at home during the lockdown, online casinos have become even more popular,” an ABC Money article noted.
“Long-time gamblers looking for some action are not the only main drivers of this boost,” the article added. “New players stuck at home are also looking for sources of entertainment, and online slots are one of the most convenient ways to keep safe nowadays.”
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