VanEck Gaming ETF (BJK)

US ETF VanEck Gaming ETF: A Comprehensive Overview

Profile:

The VanEck Video Gaming and eSports ETF (ESPO) seeks to track the performance of the MVIS Global Video Gaming and eSports Index (MVESPOTR). This index includes companies globally involved in the development, publishing, and distribution of video games, eSports, and related technologies.

Asset Allocation:

• Equity (99.6%)
• Cash and cash equivalents (0.4%)

Target Sector(s):

• Video Games
• eSports
• Technology

Strategy: Passive replication of the underlying index

Objective:

The primary aim of ESPO is to offer investors exposure to the video game & eSports industry's overall growth potential through a single investment vehicle.

Issuer:

Company: VanEck Reputation & Reliability: VanEck is a reputable asset management firm with experience in launching and managing various thematic and industry-based ETFs. They possess a strong track record within the industry, known for offering innovative and diversified products.

Management: VanEck's leadership team comprises experienced financial professionals with expertise across various asset classes and investment strategies. The ETF's management team has extensive knowledge within the gaming and technology sectors.

Market Share:

Esports is a fast-growing industry, and ESPO is one of the leading ETFs in this space. However, there are other competitors in the market that also target this industry.

Total Net Assets:

As of October 26, 2023, ESPO's Total Net Assets amounted to approximately $312.86 million.

Moat:

Unique Strategies:

• Global Focus: ESPO invests in global companies across the gaming and esports ecosystem, providing broader diversification compared to competitors focusing solely on US companies.
• MVIS Index: ESPO tracks a well-regarded industry-specific benchmark, aiming to capture the sector's growth potential effectively.

Management Expertise: VanEck's experience and established presence within the ETF space offer investors confidence in ESPO's management.

Financial Performance:

Historical data (as of October 25, 2023):

• 1-month return: 4.18%
• 3-month return: 13.11%
• Year-to-date return: 13.21%
• 1-year return: 23.75%
• 3-year return: 11.81%

Benchmark Comparison (as of October 25, 2023):

• MVIS Global Video Gaming and eSports Index (MVESPOTR):
  • 1-month: 4.37%
  • 3-month: 14.07%
  • YTD: 14.44%
  • 1-year: 24.76%
  • 3- year: 13.35

Growth Trajectory: The gaming and eSports industry is expected to experience significant growth in the coming years driven by factors like rising consumer adoption of online gaming, increased popularity of eSports tournaments, technological advancements within the gaming ecosystem, etc. ESPO, being a thematic ETF that directly invests in these trends, is poised to benefit from this industry growth.

Liquidity:

• Average Daily Volume: Approximately 300,184 shares (as of October 25, 2023)
• Bid-Ask Spread: 0.06% (average)

Market Dynamics:

• Positive factors: Growing global gaming market, rising popularity of eSports, increasing adoption of technologies like virtual reality and cloud gaming.
• Risks: Economic downturns, regulatory changes impacting the gaming industry or specific regions, competition within the sector.

Key Competitors (with market share percentages):

• Invesco Dynamic Video Gaming and eSports ETF (ESPN) (NASDAQ: 14.35%)
• Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD)(NYSE Arca:13.48%)

Expense Ratio

• The expense ratio for ESPO currently stands at 0.50%.

Risk:

• Volatility:

  • ESPO possesses a relatively high level of risk due to its concentration within a single sector.
  • The ETF's volatility can be affected significantly by factors impacting the broader gaming and esports industry.

• Other Risks:

  • Regulatory changes, competitive landscape shifts, technological disruptions, economic downturns, and individual company performance can all potentially affect ESPO negatively.

Who should consider investing?

• Investors who believe in the long-term growth potential of the global gaming and eSports industry.
• Investors comfortable with higher volatility and a concentrated sector exposure
• Investors seeking thematic portfolio diversification

Investment Approach and

• Strategy: Passive replication of the MVIS Global Video Gaming and eSports Index (MVESPOTR).
• Portfolio Composition: 100+ holdings, encompassing companies across various segments of video gaming, such as console and online game developers and publishers, eSports teams and organizers, and technology firms supporting gaming and the eSports market.

Key Points:

• Provides exposure to the global gaming market, including eSports.
• Tracks a well-regarded index specifically linked to gaming and eSports.
• Experienced management with expertise within the technology and thematic ETF space
• High daily trading liquidity, making it easy to buy and sell shares.

Fundamental Rating Based on AI:

7/10

Analysis: ESPO boasts several strengths. Its unique global scope, efficient passive management strategy, strong track record, high liquidity, and experienced management are all positive attributes. However, the relatively high expense ratio and concentration within a single sector are aspects that could potentially make investors hesitate. This comprehensive analysis of ESPO's financial health, market standing, potential growth, and key metrics yields a score of 7. However, before making any investment, individual investors should carefully assess their risk tolerance levels and investment goals to determine if ESPO aligns with those.

Resources

• VanEck website: https://www.vanecke.com/us/en/etfs/equity/espor/overview/
• Morningstar: https://www.morningstar.com/etfs/arcx/espor
• Yahoo Finance
• Important Disclaimers: The information provided here serves for informational purposes, and should not serve as financial advice or recommendation. Readers should perform their independent research and assessments before making investment decisions and understand that investing in any security involves risks including potential loss of investment capital.