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This article identifies the best gaming ETFs on the market, and compares them to one another along several dimensions such as their investment focus, performance, and fees.
Best Gaming ETFs: Overview
Here’s a list of the best gaming ETFs for 2022:
- VanEck Video Gaming and eSports ETF (ESPO)
- Global X Video Games & Esports ETF (HERO)
- Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD)
- Roundhill Sports Betting & iGaming ETF (BETZ)
- VanEck Vectors Gaming ETF (BJK)
Next, we’ll examine each in more detail.
Best Gaming ETFs
#1. VanEk Video Gaming and eSports ETF (ESPO)
The VanEck Video Gaming and eSports ETF seek to replicate the performance of an index that tracks companies involved in video game development, esports, and related hardware and software.
- Performance over 1-Year: -25%
- Expense Ratio: 0.55%
- Assets Under Management: $336 million
VanEck was the first to launch a gaming ETF and now enjoys the benefits of moving first. ESPO is the largest gaming ETF on the market.
VanEck pegs the competitive video gaming audience to be around 500 million people and expects eSports revenue to continue to grow considering the young and affluent customer base.
VanEck’s primary holdings are Nvidia and AMD, two of the premier gaming-related companies, thanks to their graphics and computing technologies.
Nvidia and AMD’s chips are essential for the graphics that bring video games to life. Also, their products enable data centers and cloud computing – two technologies that will be increasingly relied on in the rise of cloud gaming.
ESPO has healthy geographical diversity across its holdings, with 47% of net assets in US companies, 17% in Japan, 16% in China, and 10% in Taiwan.
ESPO consists of 26 constituents, with its top 10 holdings commanding 65% of the fund’s total assets.
ESPO Top Holdings
- NVIDIA (NVDA) 7.94%
- Tencent Holdings (700:HKG) 7.18%
- Activision Blizzard (ATVI) 7.09%
- Advanced Micro Devices (AMD) 6.47%
- Nintendo (7974:TKS) 6.02%
#2. Global X Video Games & Esports ETF (HERO)
The Global X Video Game & Esports ETF (HERO) 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.
- Performance over 1-Year: -30%
- Expense Ratio: 0.50%
- AUM: $198 million
Global X launched this fund a year after VanEck to compete for investor capital in the gaming arena.
HERO’s expense ratio is competitively priced against ESPO to attract new investors to its fund, charging 0.50% versus 0.58% from VanEck.
HERO has similar primary holdings as ESPO, such as Electronic Arts and Activision Blizzard, but it differs rather significantly from a geographic breakdown.
HERO invests 30% in US-based companies, 27% in Japan, 12% in South Korea, and 10% in China.
Another stark difference is HERO’s decision to exclude AMD from the fund, a company that is the second-largest holding in ESPO.
HERO does not invest in Tencent either, while it is the sixth-largest holding in ESPO.
Global X notes that the global gaming market is larger than Hollywood or professional sports and forecasts the market to surpass $200 billion by 2023.
HERO Top Holdings
- Activision Blizzard (ATVI) 9.34%
- Take-Two Interactive (TTWO) 8.35%
- Nintendo (7974:TKS) 7.69%
- Electronic Arts (EA) 7.68%
- NEXON Co. (3659:TKS) 7.21%
#3. Roundhill BITKRAFT ESports & Digital Entertainment ETF (NERD)
The Roundhill BITKRAFT ESports & Digital Entertainment ETF invests in companies involved in the competitive video gaming industry, such as video game publishers, streaming network operators, video game tournament and league operators/owners, competitive team owners, and hardware companies.
- Performance over 1-Year: -42%
- Expense Ratio: 0.50%
- AUM: $33 million
NERD is one of six targeted, pure-play exposure ETFs offered by Roundhill Investments. The firm also has ETFs for the metaverse, pro sports, streaming, and sports betting (more on this later).
Roundhill is bullish on gaming for various reasons, but one statistic it mentions captures the unparalleled potential of this market.
In 2019, there were 454 million esports viewers worldwide, and that number is expected to reach 645 million by 2022.
Again, that is viewers. More people watch video games than Netflix, HBO, ESPN, and Hulu – combined.
You can basically map the infrastructure of physical professional sports to the ecosystem of digital competition, including sponsorships, fanfare merchandise, betting, and more.
Additionally, digital versions of their analog counterparts tend to have a better ability to scale.
NERD provides access to the growing infrastructure around the gaming industry as much as it invests in more traditional gaming-related companies.
NERD is a great example of the Roundhill team’s long-term time horizon and attention to second-order bets on a rising trend.
NERD Top Holdings:
- DouYu International Holdings (DOYU) 5.54%
- Activision Blizzard (ATVI) 5.49%
- Corsair Gaming (CRSR) 5.08%
- Krafton (259960:KRX) 5.03%
- Tencent Holdings (700:HKG) 4.57%
#4. Roundhill Sports Betting & iGaming ETF (BETZ)
The Roundhill Sports Betting & iGaming ETF invests in companies that operate in-person or online sports books, online gambling platforms, and ones that provide infrastructure or technology to such companies.
- Performance over 1-Year: -47%
- Expense Ratio: 0.75%
- AUM: $128 million
Today, BETZ might not appear to be a gaming ETF, but we expect it to evolve into one as the ecosystem around gaming continues to develop.
It currently has high allocations to gambling stocks like Flutter Entertainment (owner of FanDuel), Penn National Gaming (owner of Barstool), and DraftKings.
These companies’ services were illegal until a few years ago, so the above-board infrastructure is still getting off the ground.
We see the potential for esports betting to be captured in BETZ over time.
Where there is an audience, there is speculation. Why would esports be any different?
BETZ Top Holdings
- PointsBet Holdings (PBH) 5.61%
- DraftKings (DKNG) 4.85%
- Penn National Gaming (PENN) 5.42%
- Kindred Group (KIND) 4.56%
- Entain (ENT) 4.55%
#5. VanEck Vectors Gaming ETF (BJK)
The VanEck Vectors Gaming ETF invests in casinos and casino hotels, sports betting, lottery services, gaming services, gaming technologies, and gaming equipment.
- Performance over 1-Year: -29%
- Expense Ratio: 0.62%
- AUM: $66 million
VanEck launched BJK in 2008; well before gaming’s potential was recognized by investors.
As you will see, many of the holdings are like that of Roundhill’s BETZ, but with more of a focus on in-person casinos and their attached hospitality businesses.
Instead of restructuring this fund to capture the rise of gaming, VanEck decided to make an entirely separate fund – the VanEck Video Gaming & eSports ETF, which was the first ETF covered in this article.
ESPO is certainly more of a pure-play bet on gaming than BJK.
Additionally, we believe that BETZ is better suited than BJK to capture the next era of sports betting.
BJK Top Holdings
- VICI Properties (VICI) 8.82%
- Aristocrat Leisure (ALL) 7.44%
- Evolution (EVO) 7.38%
- Las Vegas Sands (LVS) 7.11%
- Flutter Entertainment (FLTR) 5.85%
Best Gaming ETFs: The Risks
The ETFs covered in this article offer narrow, thematic exposure — and that comes at a cost.
The expense ratio on gaming ETFs is going to be significantly higher than your average broad market ETF. It’s up to you to decide if the convenience is worth the fees.
Another risk to consider is the infancy of this market. While we believe that’s where the opportunity exists, there are legitimate risks to consider.
For example, China recently banned its youth from playing video games on weekdays, a decision that erased hundreds of billions of dollars in gaming equities overnight.
Here are some other risks to consider:
- Will legacy platforms have to adopt new business models like play-to-earn to remain competitive? Or are these passing trends?
- If not, which of the issuers in this article will adapt their fund as the gaming landscape inevitably shifts?
Any investment opportunity with potential will come with its fair share of risk, including gaming.
Frequently Asked Questions
What is a gaming ETF?
Gaming ETFs invest in companies that generate the majority of their revenue from the gaming industry, including casinos, gambling, esports, gaming hardware and software, and graphics.
What is the NERD ETF?
The NERD ETF is a thematic ETF offered by Roundhill Investments that invests in next-gen gaming companies. It is one of six ETFs offered by the firm. Others focus on sports gambling, pro sports, deep value, the metaverse, and streaming.
What ETF holds Roblox?
There are an estimated 11 ETFs that hold shares of Roblox (RBLX). Some of the ETFs holding RBLX include VTI, VUG, FPX, and PSJ. The company went public in 2021 and will likely be added to more funds as it grows and matures.
Bottom Line: Best Gaming ETFs
Buying a gaming ETF provides satisfactory exposure to this booming industry. In our estimation, ESPO and HERO will cover all of your bases in this sector.
Keep Reading:
This article is for informational purposes only. It is not intended to be investment advice. To learn more about how we accurately evaluated the Best Gaming ETFs, read our editorial guidelines and public equity research methodology.
This article was updated on July 27th, 2022 to reflect the changes in performance, holdings, and other relevant characteristics of each fund.
