Market Overview

Video Game ETF Competition Gets Another Entrant With Global X's HERO

Video Game ETF Competition Gets Another Entrant With Global X's HERO

As is the case with the group of cannabis exchange traded funds, the universe of video game ETFs is growing with much of that growth occurring this year.

A new player joined the fray on Tuesday with the debut of the Global X Video Games & Esports ETF (NASDAQ: HERO).

What To Know

HERO is the fifth dedicated video game ETF in the U.S. and the third one to come market this year. Four of those funds have launched over the past 12 months.

The new HERO, which hails from a long line of Global X thematic ETFs, many of which are successful, follows the Solactive Video Games & Esports Index.

HERO's investment objective is “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,” according to Global X.

Why It's Important

HERO's underlying index is home to 36 stocks with Electronic Arts (NASDAQ: EA), Nvidia (NASDAQ: NVDA) and Take-Two Interactive Software (NASDAQ: TTWO) combining for over 18%. Like its rivals, HERO provides exposure to a rapidly growing market.

“Analysts estimate global revenues in 2018 were nearly $140 billion, far more than the global box office revenue for movies & film ($42 billion) and global professional sports revenue ($52 billion – based on latest available estimates from 2016),” according to Global X research.

The new Global X fund looks to capitalize on trends, such as more communal gaming and gamers' increased devotion to the craft.

“Not only is the community of gamers growing, but the amount of time playing and watching video games is increasing as well,” said Global X. “The average gamer spends seven hours and seven minutes per week gaming.”

What's Next

As noted above HERO enters a growing field of video game ETFs, a group of funds that investors are slowly embracing but none of which currently have $100 million in assets under management.

The growth of esports, cloud computing and 5G, which is expected to drive increased mobile gaming, are themes still in their nascent stages and could prove pivotal in terms of driving assets to video game ETFs.

The new HERO charges 0.50% per year, or $50 on a $10,000 investment, putting in the middle of the pack in terms of video game ETF fees.

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