Market Overview

3 ETFs For DraftKings Exposure

3 ETFs For DraftKings Exposure

It's been about 10 weeks since the DraftKings (NASDAQ: DKNG) initial public offering and while it's fair to say the stock is still hot, having more than tripled from its days as a special purpose acquisition company (SPAC) late last year, shares of the online sports betting firm are in the midst of the first pullback.

Over the past month, DraftKings is lower by 20%. Several factors explain that retreat, including a recent spate of insider selling, which unnerved some smaller investors. Additionally, the recent resurgence in coronavirus cases is stoking doubt that the NHL and NBA will return as planned later this month. Moreover, a second wave of COVID-19 cases could force dramatically alter the landscape for the 2020 football season. Football is the most wagered on sport in the U.S.

Still, analysts remain enthusiastic about DraftKings, with several recent price targets on the name touching or surpassing $50.

For investors that want some DraftKings exposure, here are some ETFs to mull over.

Fidelity NASDAQ Composite Index Fund (ONEQ)

The Fidelity NASDAQ Composite Index Fund's (NASDAQ: ONEQ) weight to DraftKings is tiny at about 0.10%, but the fund is being mentioned here because of the stock's Nasdaq listing.

Something for index nerds and DraftKings shareholders to keep an eye one is when the stock makes the move to the NASDAQ Q-50 Index, the index comprised of the next 50 companies inline for promotion to the popular Nasdaq-100 Index. DraftKings isn't here yet, but when it gets to the Q-50, it could just be a matter of time before it gets to the Nasdaq-100.

Roundhill Sports Betting & iGaming ETF (BETZ)

The Roundhill Sports Betting & iGaming ETF (NYSE: BETZ) is the first ETF dedicated to the booming iGaming and sports wagering theme and it was the first ETF to feature DraftKings. Since BETZ debuted about a month ago, nine other ETFs have followed suit.

When BETZ launched, DraftKings was the fund's largest holding, but some additions to the underlying index and investors' enthusiasm for some of the ETF's other components shuffled the sportsbook stock to the fifth spot at a weight of 5.29%. That is still tops among all ETFs with exposure to the stock.

Plus, BETZ is an undisputed success, raking in almost $89 million in assets in just a month on the market.

VanEck Vectors Gaming ETF (BJK)

BETZ is one of just two ETFs that devotes more than 0.50% to DraftKings. The other is the VanEck Vectors Gaming ETF (NASDAQ: BJK), which in a somewhat stealthy fashion, features a 5% weight to the stock, making it its sixth-largest holding. Combine that with an 8.35% weight to FanDuel parent Flutter Entertainment (OTC: PDYPY), and BJK has increasing exposure to sports betting and iGaming.

Disclosure: The author owns shares of DraftKings.


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