New York-based Defiance ETFs has launched its debut fund, the Defiance Future Tech ETF (AUGR US), on NYSE Arca. The equity fund is designed to capture opportunities within the realm of augmented reality and virtual reality technology.
The application of AR/VR technology has expanded beyond gaming to industries such as healthcare, retail, manufacturing, and entertainment.
“The AR/VR space has extended far beyond its roots in gaming to applications in healthcare, retail, manufacturing, entertainment and more,” said Matthew Bielski, founder and CEO of Defiance ETFs.
Bielski added, “In the healthcare sector alone, there have already been cases where surgeons used augmented reality technology to assist in heart transplant operations, and new AR approaches are helping doctors manage sensory overload issues for patients, such as children with autism, during medical procedures. These are just a few of the real world applications of this technology.
“But as the category matured and expanded, investors lacked options for adding targeted exposure to AR/VR leaders to their portfolios. With AUGR that problem has been solved, and access to the category is now available in a highly liquid ETF wrapper.”
The underlying BlueStar Augmented and Virtual Reality Index is a rules-based index tracking companies globally engaged in the development or commercialization of AR/VR technologies within one of seven categories: gaming systems and video games; artificial intelligence, including machine vision and natural language processing; graphic processing units; cloud computing infrastructure; simultaneous localization and mapping; displays including holographic and adaptive interfaces; and sensors for depth perception and positioning.
With a minimum market capitalization requirement of $150 million, the ETF provides exposure to firms from across the market-cap spectrum. The index is equal weighted, reducing the concentration risk of well-known large-caps such as Nintendo, Disney, Sony and Snapchat, and offering investors more targeted exposure to smaller companies with higher growth potential.
Reconstitution and rebalancing occurs on a semi-annual basis.
Firms from the US account for nearly two-thirds (63.2%) of the total index weight, with the next largest country exposures being Japan (16.4%), France (4.8%) and China (4.2%). There are currently 62 index constituents as of 1 August 2018.
AUGR comes with an expense ratio of 0.65%.
Also providing exposure to the AR/VR theme is the Tactile Analytics AR/VR Virtual Technologies Fund (ARVR US).
Originally launched as the Wearable Technologies ETF, providing exposure to companies that are engaged in the manufacture and sale of wearable devices, the fund changed its investment mandate last month to home in on the AR/VR theme. It now tracks the EQM Tactile AR/VR Virtual Technology Index, consisting of global companies found along the entire AR/VR supply chain. This includes those that manufacture electronic components used to construct AR/VR hardware, develop the software that utilize the hardware, develop content for use on AR/VR hardware, and manage content distribution platforms or deploy AR/VR hardware/software as part of a customer solution or offering.
ARVR is notably more expensive than AUGR with an expense ratio of 0.85%.