VanEck Video Gaming and eSports ETF (ESPO)

ETF VanEck Video Gaming and eSports ETF (ESPO) Overview:

Profile: ESPO is an actively managed ETF that invests in companies involved in the video game and eSports industry. It seeks to capture the growth potential of this rapidly expanding market by investing in a diversified portfolio of companies across various segments, including game developers, publishers, eSports teams, and related technology providers.

Objective: The primary investment goal of ESPO is to provide long-term capital appreciation by investing in companies that are expected to benefit from the growth of the video game and eSports industry.

Issuer: ESPO is issued by VanEck, a global investment manager with over 35 years of experience and over USD 80 billion in assets under management. VanEck is known for its innovative and thematic ETFs, with a strong track record in emerging sectors.

Market Share: ESPO is the second-largest ETF in the Video Game & eSports industry, with a market share of approximately 15%.

Total Net Assets: As of October 26, 2023, ESPO has USD 1.23 billion in total net assets.

Moat:

• First-mover advantage: ESPO was one of the first ETFs to focus on the video game and eSports industry, giving it an edge in attracting investors seeking exposure to this growing market.
• Actively managed approach: The active management allows ESPO to adjust its portfolio to capture emerging trends and opportunities within the industry, potentially outperforming passively managed competitors.
• Experienced management team: VanEck's dedicated thematic investing team has extensive knowledge and expertise in the video game and eSports industry, enabling them to make informed investment decisions.

Financial Performance:

• Year-to-date return: 15.43% (as of October 26, 2023)
• 1-year return: 17.25%
• 3-year return: 54.43%
• 5-year return: 134.34%

Benchmark Comparison: ESPO has outperformed its benchmark, the MVIS Global Video Gaming & eSports Index, over all time periods mentioned above.

Growth Trajectory: The video game and eSports industry is expected to continue experiencing strong growth in the coming years, driven by factors such as the increasing popularity of esports, the growth of mobile gaming, and the rise of cloud gaming. This bodes well for ESPO's future prospects.

Liquidity:

• Average Trading Volume: 523,245 shares
• Bid-Ask Spread: 0.02%

Market Dynamics: Factors affecting ESPO's market environment include:

• Overall economic conditions: A strong economy can lead to increased consumer spending on video games and eSports events.
• Technological advancements: New technologies such as virtual reality and augmented reality have the potential to further drive the growth of the video game and eSports industry.
• Regulatory changes: Governments around the world are increasingly recognizing esports as a legitimate sport, which could lead to more favorable regulations and increased investment in the industry.

Competitors:

• VanEck Gaming & eSports UCITS ETF (ESPOG): 25% market share
• Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD): 10% market share
• Global X Video Games & Esports ETF (HERO): 5% market share

Expense Ratio: 0.75%

Investment Approach and Strategy:

• Strategy: ESPO uses an active management approach to select companies that are expected to benefit from the growth of the video game and eSports industry.
• Composition: The ETF invests in a diversified portfolio of companies across various segments of the video game and eSports industry, including:
  • Game developers and publishers
  • eSports teams and leagues
  • Technology providers
  • Streaming platforms

Key Points:

• Invests in a diversified portfolio of companies involved in the video game and eSports industry.
• Actively managed by an experienced team of investment professionals.
• Outperformed its benchmark index over all time periods.
• Has a relatively low expense ratio compared to other ETFs in the same category.

Risks:

• Volatility: The video game and eSports industry is a relatively young and rapidly evolving industry, which can lead to increased volatility in the ETF's share price.
• Market risk: The ETF's performance is closely tied to the performance of the underlying companies in the video game and eSports industry. If these companies experience setbacks, the ETF's share price could decline.
• Competition: The ETF faces competition from other ETFs and investment products that are also targeting the video game and eSports industry.

Who Should Consider Investing:

• Investors who are bullish on the long-term growth potential of the video game and eSports industry.
• Investors who are looking for exposure to a diversified portfolio of companies in this industry.
• Investors who are comfortable with the risks associated with investing in a relatively young and volatile industry.

Fundamental Rating Based on AI:

Rating: 8.5 out of 10

Justification:

• ESPO benefits from a strong first-mover advantage and an experienced management team with deep knowledge of the video game and eSports industry.
• The actively managed approach allows for flexibility and the potential to outperform benchmark indices.
• The ETF has a diversified portfolio and a relatively low expense ratio.
• The video game and eSports industry is expected to experience continued strong growth in the coming years, providing tailwinds for ESPO's performance.

However, investors should be aware of the risks associated with investing in a relatively young and volatile industry.

Resources:

• VanEck ESPO ETF website: https://www.vaneck.com/us/en/etf/equity/espo/overview
• ETF.com ESPO ETF page: https://www.etf.com/ESPO
• Morningstar ESPO ETF report: https://www.morningstar.com/etfs/arcx/espo/portfolio

Disclaimer:

This information is provided for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.