Rev up your trading consoles for a new player in the ETF game.
Launched yesterday, the PureFunds Video Game Tech ETF (ARCA: GAMR) is the first ETF focused on the video game industry. It is based off the EE Fund Video Game Tech Index and consists of 36 exchange-listed companies across the globe that support or utilize the video game industry.
The industry has been on a sharp upward curve for the last decade. Video game sales surged 8% in January. In 2015, the digital game market reached an all-time high of $6.1 billion. The emergence of new computing platforms, such as virtual reality headsets, is only expected to further grow the industry.
In its press release announcing launch of the fund, PureFunds stated the list of companies in the fund included video game software developers, publishers and distributors, gaming platform providers, gaming accessories and large tech and media conglomerate. The exact list of companies that comprise the ETF is not publicly available; however, the fund managers said it included names such as Activision Blizzard Inc. (ATVI), Logitech Nintendo, and Nvidia Corp. (NVDA). The fund has an expense ratio of 0.75%. PureFunds partners in the venture include Factor Advisors and ISE ETF Ventures.
PureFunds has launched a number of thematic ETFs in recent times. Last year, it launched an ETF that tracked fortunes of companies involved in the emerging mobile payments industry. It also launched an ETF focused on the drone industry today. The PureFunds Drone Economy Strategy ETF (ARCA:IFLY) tracks the Reality Shares Drone Index, which comprises 47 companies involved in the drone industry. The top three holdings in the ETF are Aerovironment Inc. (AVAV) (12.4%), Parrot S.A. (PARRO.PA) (9.1%), and Boeing Co. (BA) (4.6%).
There has been a surge of technology-based thematic funds targeted at different sectors of the technology economy in recent times. For example, Ark investments has a fund called Web x.o that tracks the fortunes of a diverse range of new economy companies in the technology industry. As detailed on its website, these companies work in diverse areas of the tech industry including big data, cryptocurrencies, and the sharing economy. But the returns from such funds hasn’t always been up to par. For example, PureFunds CyberSecurity ETF (HACK) was the fastest growing ETF in 2014, when it was launched amidst news of a growing market for cybersecurity companies, In the last year, however, it is down by 19.13%.
The Bottom Line
Technology is a growth sector for investing and a growing crop of ETFs have emerged to leverage its growth prospects. The video game industry is set to boom in the coming years and the PureFunds ETF intends to ride the boom with its passively managed fund.