Video game exchange traded fund ETFMG Video Game Tech ETF GAMR is among the most underrated ETFs — an undeserved distinction, according to Bloomberg's Eric Balchunas.
What Happened
A disconnect exists between the $130-million market cap of the video game ETF and the $130-billion industry it tracks, Balchunas said on Bloomberg TV. The video game industry is twice the size of the robotics industry, which is represented by $6 billion in ETFs, he said.
Seventy-five percent of the Video Game Tech ETF is directly exposed to the video game industry, while the overlap with the broader Technology Select Sector SPDR Fund XLK is just 9 percent, Balchunas said.
Why It's Important
One of the contributing factors to a lack of popularity among investors for video game exposure is a perception issue, Ted Pollak told Bloomberg. He's the president and founder of EE Fund Management, the operator of the Game Tech Index.
The "older guard generation" of investors and fund managers fail to understand that video games are more than just "toys," he said.
Video games offer consumers a form of "interactive entertainment" where they are part of the experience, Pollak said.
The target market is essentially every person of every age from every geographic region, which creates a "perfect storm" for investors, he said.
What's Next
Video games will continue to be a driver of growth for most of the technology industry, Pollak said.
For instance, the popularity of video games spurs demand for high-resolution 4K displays, which implies higher demand for semiconductor components, he said.
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