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Video Gaming Thrives in Pandemic: 3 Top ETFs to Gain

Sweta Jaiswal, FRM
·4 mins read

It seems like there is no stopping video game players this year, with the health crisis forcing people to stay at home. Moreover, the boom in the video gaming space may remain in the post-pandemic era as the outbreak has changed the lifestyle and preferences of Americans to a large extent.

Video Game Demand on the Rise

Going by new data from The NPD Group, the video game industry, including packaged media, digital, consoles and accessories, saw strong sales in August with people spending a total of around $3.33 billion. Notably, the figure is also up 37% year over year from $2.43 billion. In fact, August was the fifth consecutive month of impressive rise in sales compared to the year-ago period. Sales of games and hardware rose 73%, 52%, 26% and 32%, respectively, in April, May, June and July.

On the hardware front, consumers spent $229 million, up 37% year over year with Nintendo Co.’s (NTDOY) Switch being the hottest-selling console again. Switch also set a new record for August hardware dollar sales, beating the record set in 2008 by the Wii. Overall, Switch unit sales volume has more than doubled from a year ago.

Meanwhile, software sales rose 37% year over year to $2.94 billion from $2.14 billion, per The NPD Group report. August saw the release of several new titles in long-running and popular series. Notable among these was the No. 1-selling Madden NFL 21 from Electronic Arts (EA), which topped the charts despite only officially getting released for multiple platforms in the final days of the month. In fact, this also marked the 21st consecutive year that a Madden NFL game grabbed number one in its release month.

Going on, five of the top 10 games for the month came from Nintendo with Animal Crossing, Ring Fit Adventure, Mario Kart 8: Deluxe, Super Smash Bros. Ultimate, and Paper Mario: The Origami King taking spots five through nine. With support from Sony PS4 DualShock 4 Wireless Controller Black, accessories sales have risen 42% to a monthly record of $166 million, per the same report.

Video Game ETFs to Keep Shining

It seems that the rest of 2020 will continue to bear the brunt of the coronavirus outbreak as the number of cases continues to rise. Against this backdrop, investors can take a look at the following video gaming ETFs:

VanEck Vectors Video Gaming and eSports ETF ESPO — up 59% year to date

The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Video Gaming and eSports Index, which is intended to track the overall performance of companies involved in video game development, esports, and related hardware and software. It holds 25 stocks in its basket. Top gaming companies like Nintendo and Activision Blizzard (ATVI) have spots in the first ten holdings. With AUM of $492.3 million, the fund charges 55 basis points in expense ratio (read: Bet on These ETFs to Gain From Coronavirus-Shaped "New Normal").

Global X Video Games & Esports ETF HERO — up 64.1%

The fund seeks to invest in companies that develop or publish video games, facilitate the streaming and distribution of video gaming         or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality. It holds 40 stocks in its basket. Big gaming companies like Nintendo and Activision Blizzard are in the top ten holdings. With AUM of $307.1 million, the fund charges 50 basis points in expense ratio (read: 5 Sector ETFs That Have Trumped Covid Fear This Year).

Wedbush ETFMG Video Game Tech ETF GAMR — up 49.5%

The fund provides pure-play and diversified exposure to a dynamic intersection of technology and entertainment. It also corresponds generally to the price and yield performance of the EEFund Video Game Tech Index. The index is designed to reflect the performance of companies involved in the video game technology industry, including game developers, console and chip manufacturers and game retailers. It holds 87 stocks in its basket. With AUM of $121.3 million, the fund charges 75 basis points in expense ratio.

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Global X Video Games Esports ETF (HERO): ETF Research Reports
 
Wedbush ETFMG Video Game Tech ETF (GAMR): ETF Research Reports
 
VanEck Vectors Video Gaming and eSports ETF (ESPO): ETF Research Reports
 
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