VanEck rolls out Video Gaming & eSports ETF in Italy and Switzerland

Oct 15th, 2019 | By | Category: Equities

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VanEck has cross-listed the VanEck Vectors Video Gaming and eSports UCITS ETF on Borsa Italiana and SIX Swiss Exchange.

video gaming esports etf

The fund is the first ETF in Europe to home in on the video gaming and eSports theme.

The fund provides exposure to a global portfolio of companies operating in the video gaming industry, including those involved with eSports (organized, multiplayer competitions with real money prizes).

The new listings trade in euros on Borsa Italiana (ESPO IM) and in Swiss francs on SIX Swiss (ESPO SW).

The fund debuted in Europe in July 2019 with listings in US dollars (ESPO LN) and pound sterling (ESGB LN) on London Stock Exchange, and in euros on Deutsche Börse (VE4R GR).

Methodology

The ETF achieves its exposure by tracking the MVIS Global Video Gaming and eSports Index which was created by MV Index Solutions, VanEck’s indexing division.

The index consists of companies from both developed and emerging markets with market capitalizations of at least $150 million and three-month average daily trading volume of at least $1m that meet certain revenue relevance criteria.

To home in on the theme, the methodology includes only those firms with at least 50% of their revenue earned in the video gaming and eSports industries. Eligible companies include those that develop video games and related software/hardware, provide streaming services, or host eSports events.

Once in the index, a constituent can see its proportion of revenue derived from the video gaming and eSports sector fall below 50% and still remain in the index so long as the proportion stays above 25%.

The index is weighted by free-float market capitalisation with a single-issuer cap of 8%. Reconstitution and rebalancing occur on a quarterly schedule.

Roughly a third (35.2%) of the index is presently allocated to stocks from the US, followed by Japan (26.9%), China (15.9%), South Korea (7.6%) and Thailand (4.6%). The index is predominantly focussed on stocks in the communication services sector, at 77.5% of the total index weight, followed by information technology stocks which make up 17.5%.

While the index excludes some major US-based players in the eSports industry – such as Microsoft and Amazon – due to the methodology high revenue exposure threshold for index inclusion, the constituent list includes most of the well-known names in the space: namely Nvidia (8.4%), Tencent Holdings (7.8%), Activision Blizzard (7.1%), Nintendo (6.2%), Advanced Micro Devices (6.4%), and Electronic Arts (5.4%).

The fund comes with an expense ratio of 0.55%. Income is accumulated and reinvested in the portfolio.

Strong growth figures in the industry have led video gaming and eSports to be a popular theme with ETF product developers this year. There are currently three funds in the US targeting the sector, while VanEck is the first ETF issuer to bring the strategy to Europe.

The fund has yet to push the right buttons with investors, however, housing just $10 million in assets under management.

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