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Investment Profile

Gamers FTW!: Invest in a Video Games ETF on Stash

Holdings

G5 Entertainment, Capcom, Nintendo, EA, Activision Blizzard, and more

Managed by

ETF Managers Group LLC
Ticker: GAMR

Risk Level

Conservative

Risk Level

Conservative

Ask a serious gamer if video games are just children’s entertainment.

Video games have gone way beyond the console, rescuing the girl from the barrel-tossing gorillas and the super-secret code “up, up, down, down, left, right, left, right B, A, start.”

You can play a game with someone across the world. You can play a game on your phone. You can choose an avatar and live life in another dimension. You can unlock puzzles, navigate super-realistic war scenarios, or travel back in time to change the course of history.

You can have a dance, dance revolution or “play” guitar to your favorite songs. Video games allow us to live out alternative realities, make friends, and see the world through new eyes.

Who’s playing?

Gamers from ages 8 to 88 are pressing and hitting ‘ready, player one.’ Two-thirds of American households contain people who regularly play video games, according to industry data.

America’s gamers are also increasingly diverse, as the results of a recent Pew Research survey show; Young men make up the industry’s largest base of consumers, but gaming is popular across racial, age-related, and educational barriers.

0%
American households are home to gamers
$0B
Industry size in 5 years

Video games are a big global powerhouse business, with tentacles that reach into our phones, our favorite comic book characters, and our virtual lives. The industry could be worth as much as $230 billion in the next five years. That’s a high score.

If you want to “power up” your portfolio on Stash, all you have to do is check out Gamers FTW! It’s the  ETFMG Video Game Tech ETF (ticker: GAMR).

What’s in Gamers FTW!

Gamers FTW! tracks the EEFund Video Game Tech Index, which is an equity index of companies that create and support the video game industry. The Index tracks the stock performance of companies in both game development and supporting technologies as well, per the fund prospectus.

The fund contains 58 company stocks. Among the companies in the fund are game makers Capcom, Nintendo, and Zynga, along with big tech companies like Sony, Microsoft, and Apple.

More than a third of the company stocks held by the fund are based in the U.S., while the rest are mostly allocated in Asia and a handful of northern European countries.

Nearly half of the holdings are concentrated in Japan, South Korea, China, Taiwan and Hong Kong, regions where gaming is an enormous industry.

Some of the Asian companies in the fund include Capcom, Nintendo, NetDragon, and Konami.

The holdings land in one of three categories: “Pure play”, which refers to hardware and software developers, “non-pure-play”, which are companies that support others with intellectual properties, and “conglomerate” companies, that support the industry on a broader scale.

Are there similar funds?

Gamers FTW! (GAMR) was the first of its kind, and it remains the only gaming-focused fund out there. There are others that give investors exposure to the technology industry, but this is the only ETF narrowly focused on gaming.

Gamers FTW! fund performance:

The fund, managed by ETF Managers Group, launched on March 9, 2016.

With roughly 2.2 billion people playing video games on consoles, computers, and smartphones, gaming has grown into a $109 billion industry, according to industry data. The performance of the fund over the past two years reflects that growth.

Year-to-date, the fund had a return of 5.4%  as of March 19, 2018, according to Morningstar. Over the course of the past year, the share price of the fund has increased 49.93%. Overall, Gamers FTW! has doubled its value since it initially started trading two years ago. The fund’s price has remained above $50 for much of 2018.

Return YTD
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Price increase, 1 year
0

This fund has an expense ratio of 0.75%, according to the fund prospectus. That is a bit more than the industry average of 0.23%, according to industry sources.

While Gamers FTW! is the first ETF devoted to gaming, the majority of the companies in the portfolio are in the tech sector. One similar fund, the John Hancock Multifactor Technology ETF (ticker: JHMT) contains many of the same larger tech companies in its portfolio, and year-to-date, has provided a return of more than 8%, according to Morningstar.  

Potential risks

The fund concentrates on non-U.S. stocks, which can be more volatile, according to the fund prospectus, and can also be subject to currency risks, compared to U.S. stocks. There’s also potential risk associated with political and economic turmoil, both domestic and abroad.

The fund is also vulnerable to changing interest rates and currency-exchange rates related to its holdings outside of the U.S.

There’s also the threat of new or increased regulation of the gaming industry to take into account. President Trump, for example, recently met with representatives from the gaming industry about potential restrictions on violent video games.

Though video games are subject to First Amendment protections in the U.S., some countries, like Australia, have implemented guidelines on which games can be sold, and has banned games due to excess violence, drug use, and sexual content.

Top takeaways

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By Stash Team

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