Pacer launches digital entertainment ETF

Apr 15th, 2022 | By | Category: Equities

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Pacer ETFs has launched a new thematic equity ETF providing exposure to companies worldwide that specialize in digital entertainment.

Sean O’Hara, President of Pacer ETFs Distributors

Sean O’Hara, President of Pacer ETF Distributors.

The Pacer BlueStar Digital Entertainment ETF (ODDS US) is designed as a one-ticker solution for investors seeking access to multiple digital entertainment segments including online gambling, video games, and eSports.

The fund has been listed on Nasdaq with an expense ratio of 0.60%.

According to Pacer, the ETF’s underlying companies not only benefitted from consumer changes brought on by the Covid-19 pandemic but are poised for further growth due to persistent tailwinds such as growing digital footprints across generations, the widespread adoption of augmented and virtual reality, and reduced restrictions on the gambling market.

Sean O’Hara, President of Pacer ETF Distributors, said: “It’s undeniable that consumers across the globe are spending more time consuming media, playing online video games, and gambling, and businesses are adapting to improve revenue streams from these trends.

“As leaders in the thematic ETF space, we believe a passive, rules-based approach providing exposure to both online gambling operations and gaming or eSports through one ETF can be beneficial to offer at this time.”

Methodology

The fund is linked to the BlueStar Global Online Gambling, Video Gaming, and eSports Index which selects its constituents from a universe of global stocks with market capitalizations above $150 million and average daily trading volumes greater than $1m.

The methodology screens for companies operating within a range of industries linked to the digital entertainment theme including online gambling platforms; online gambling software; video game development; video gaming software and hardware; streaming services; eSports operators; and eSports software and hardware.

Companies identified from the screening process are classified into one of two buckets: online gambling, or video gaming & eSports.

Within each bucket, the methodology selects the largest companies while targeting a minimum of 25 constituents and at least 90% of the bucket’s total market capitalization.

The weight of each bucket is set to 50%. Within each bucket, constituents are weighted by float-adjusted market capitalization while capping most stocks at 8% except for semiconductor companies which are capped at 3%. Reconstitution and rebalancing occur semi-annually.

As of 14 April, nearly a quarter (23.2%) of the index was allocated to stocks listed in the US with the next-largest country exposures being The Cayman Islands (16.5%), Japan (11.0%), Sweden (10.9%), and Australia (9.2%).

Consumer discretionary and communication services stocks dominated with weights of 45% each with the remaining weight allocated to the information technology sector.

Notable positions included Evolution AB (8.5%), Tencent (8.4%), Aristocrat Leisure (8.1%), Flutter Entertainment (7.8%), and Entain (5.6%).

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