Some of the top-performing themes of this year totally make sense given current geopolitical and macro headwinds. Those include gold, defense, uranium and nuclear. But video gaming has been a top investment theme this year as well.
This might not be a surprise for anyone trying to source a new Nintendo Switch 2 handheld gaming console. The company sold a record-setting 3.5 million Switch 2 units within four days of the product’s June 5 launch. Nintendo projected the sale of roughly 15 million Switch 2 units, which retail at $449.99, in the first year. By the end of its first week of sales, the product already met 20% of that annual goal.
But that is not the only industry catalyst sending video gaming stocks soaring this year. There are also a number of highly anticipated video game launches on the way, including Grand Theft Auto 6 and Call of Duty Black Ops 7. Grand Theft Auto 6 in particular has taken over 11 years and between $1 billion and $2 billion to develop.
You can read more about the compelling investment case for video gaming in the white paper for our VettaFi Video Game Leaders Index (VGAME). In addition to this year’s blockbuster new releases, other factors contributing to the strong investment potential of video gaming stocks. Those include an expanding global consumer base, technological innovation, the boom of mobile gaming, market consolidation, and diversified revenue models.
Video Gaming ETFs
There are many diversified video gaming ETFs that provide targeted exposure to this theme, as shown in the table below.
| Symbol | ETF Name | Total Assets (Millions) | YTD Performance | Expense Ratio |
|---|---|---|---|---|
| HERO | Global X Video Games & Esports ETF | $163 | 37.18% | 0.50% |
| NERD | Roundhill Video Games ETF | $25 | 33.32% | 0.50% |
| ESPO | VanEck Video Gaming and eSports ETF | $381 | 28.71% | 0.56% |
| GAMR | Amplify Video Game Leaders ETF | $41 | 27.85% | 0.59% |
While all the video gaming ETFs this year are delivering outsized returns, holdings, exposures, and approaches do vary. The YTD performance leader, the Global X Video Games & Esports ETF (HERO ), holds Konami Group, ROBLOX, and Nintendo as its top holdings, which have delivered stellar returns of 51%, 82%, and 45% respectively. HERO holds 50 stocks, with 82% of that exposure in video gaming software. Similarly, the Roundhill Video Games ETF (NERD ), with 35 holdings, has a 78% allocation to video game software.
The other two video-game focused ETFs, the VanEck Video Gaming and eSports ETF (ESPO ) and the Amplify Video Game Leaders ETF (GAMR ) are both more concentrated. They hold 31 and 23 companies, respectively. However, while ESPO also has 70% software exposure, GAMR has broader exposure that includes 34% software, 24% internet, and 22% semiconductors, with the remaining 20% exposure in other gaming segments. Despite being the most concentrated, using a “leaders” approach, GAMR is the most diversified. Its top holdings include AMD, Nvidia, and Microsoft, which offer gaming chip (GPU) and gaming platform exposure. The fund is well differentiated in the video gaming mix relative to its peers.
Playing the Gaming Trend
The gaming industry has come a long way since the first commercial video game success, Atari’s Pong, in the 1970s. Today, advancements in virtual and augmented reality, cloud gaming, Web 3.0, blockchain, and artificial intelligence are creating new revenue streams and enhanced gaming possibilities. Regardless of how you want to “play” video gaming, getting exposure in a diversified, tax efficient ETF structure has been a smart way to access the theme this year for investors.
For more news, information, and analysis, visit our Disruptive Technology Channel.
VettaFi LLC (“VettaFi”) is the index provider for GAMR, for which it receives an index licensing fee. However, GAMR are not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of GAMR.
