Roundhill targets streaming industry with new active thematic ETF

Feb 16th, 2021 | By | Category: Equities

Roundhill Investments has launched an actively managed equity ETF providing exposure to companies involved in the streaming industry.

Roundhill streaming ETF

The fund provides thematic exposure to companies aligned with the media streaming industry.

The Roundhill Streaming Services & Technology ETF (SUBZ US) has listed on NYSE Arca and comes with an expense ratio of 0.75%.

The fund offers investors pure-play access to a market that is expected to grow significantly as consumers switch from traditional content delivery to streaming services.

The global video streaming market alone is predicted to expand at a compound annual growth rate of 20.4% between 2020 and 2027, driven by the greater availability of high-speed internet and bandwidth worldwide, according to market research consultants Grand View Research.

Firms utilizing a subscription-based revenue model also benefit from reliable recurring revenue and a low incremental cost for each new user added to the service.

Mario Stefanidis, Portfolio Manager at Roundhill Investments, commented: “Media streaming continues to grow rapidly as more consumers abandon traditional media and subscribe to a select number of streaming services. This transition, accelerated over recent years, has taken place across multiple industries including video, audio, and even gaming.”

Investment approach

The ETF is mandated to invest in relevant companies of any market capitalization from developed or emerging markets, including special purpose acquisition companies (SPACs) that have announced their intention to merge with or acquire a streaming company.

Eligible firms include media companies operating direct-to-consumer streaming services across video, audio, gaming, live streaming, and even health platforms, as well as technology firms that are creating the infrastructure necessary to facilitate streaming.

To a lesser extent, the ETF may also invest in companies providing streaming analytics and market research, as well as manufacturers of streaming-related equipment such as headphones, keyboards, cameras, and virtual reality headsets.

Eligibility will be determined using proprietary analysis of a firm’s ‘thematic relevance’ while the portfolio will be constructed in such a way as to diversify across sub-themes, geographies, and market capitalizations.

The portfolio consists of 35 names at launch with just over half (54.5%) of the portfolio by weight allocated to US-listed stocks and a quarter (26.9%) to Chinese equities. The next largest country exposures are Sweden (5.8%), Japan (5.1%), South Korea (4.7%), and Canada (3.0%).

Notable positions include Netflix (6.0%), Roku (6.0%), Spotify (5.7%), Tencent Music (5.6%), J-Stream (5.0%), Kuaishou (4.7%), AfreecaTV  (4.7%), fuboTV (4.1%), and Walt Disney (4.1%).

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