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Is it the Right Time to Play Video Gaming ETFs? Let's Explore

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The coronavirus outbreak continues to aggravate in the United as the total number of cases cross 5.7 million, with the death toll surpassing 176,000. This health crisis has forced people to maintain social distancing and work remotely. In such a scenario, people are depending on in-house entertainment. Thus, with kids staying at home and adults looking for some indoor fun activities during leisure time, the video game industry is experiencing a boom.

In fact, The Global Gaming Study: Impacts of COVID-19 conducted by Simon-Kucher & Partners and Dynata in May-June 2020 highlights how the coronavirus outbreak has buoyed the video gaming industry. It reveals that there is a 30% rise in gamers who stay occupied for more than five hours a week. The report also shows that there is a 39% increase in monthly expenditure on video games. This study that surveyed more than 13,000 people across 17 countries about their gaming preferences and behavior also highlights that these lifestyle changes will remain even after the lifting of lockdown.

Video Games Sales Keep Soaring

Going by new data from the NDP Group, the video game industry including hardware, software and accessories saw record-breaking sales in the second quarter with people spending lavishly around $11.6 billion in the United States. The figure was also the highest total second-quarter spending on gaming in U.S. history. Notably, the figure is also up 30% year over year and 7% from the first quarter, when spending had hit $10.9 billion.

Notably, $10.2 billion was spent on content, which includes both video games and downloadable content, up 28% from the same period last year. Console sales also rose year over year, after briefly declining in June. Moreover, there was a total 57% year-over-year rise in sales of Nintendo Co.’s (NTDOY) Switch, Microsoft Corporation’s (MSFT) Xbox One and Sony Corporation’s (SNE) PS4 to $848 billion. Also, the top selling games included Animal Crossing: New Horizons, Call of Duty: Modern Warfare, Call of Duty: Warzone, Candy Crush Saga, Candy Crush Soda Saga, Final Fantasy VII: Remake, Grand Theft Auto V, Mario Kart 8: Deluxe, Minecraft, NBA 2K20, Pokémon Go and The Last of Us: Part II.

In fact, sales in the video gaming industry, including hardware, software, and accessories, reached the highest level since hitting $7 billion in 2010 for the first six months of the year, per an article on The Verge. Sales in the video game industry through June 2020 in the United States came in at $6.6 billion, up 19% year over year.

Video Game ETFs to Keep Shining

It seems that the second half of 2020 will continue to bear the brunt of the coronavirus outbreak as the number of cases continues to rise. Against this backdrop, investors can take a look at the following video gaming ETFs:

VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report) — up 61% year to date

The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Video Gaming and eSports Index, which is intended to track the overall performance of companies involved in video game development, esports, and related hardware and software. It holds 25 stocks in its basket. Top gaming companies like Nintendo and Activision Blizzard (ATVI) have spots in the first ten holdings. With AUM of $447.7 million, the fund charges 55 basis points in expense ratio (read: ETFs to Watch Post Stellar Q2 Earnings From Nvidia).

Global X Video Games & Esports ETF (HERO - Free Report) — up 64.2%

The fund seeks to invest in companies that develop or publish video games, facilitate the streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality. It holds 40 stocks in its basket. Big gaming companies like Nintendo and Activision Blizzard are in the top ten holdings. With AUM of $245.8 million, the fund charges 50 basis points in expense ratio (read: 5 Sector ETFs That Have Gained More Than 50% This Year).

Wedbush ETFMG Video Game Tech ETF (GAMR - Free Report) — up 51%

The fund provides pure-play and diversified exposure to a dynamic intersection of technology and entertainment. It also corresponds generally to the price and yield performance of the EEFund Video Game Tech Index. The index is designed to reflect the performance of companies involved in the video game technology industry, including game developers, console and chip manufacturers and game retailers. It holds 88 stocks in its basket. With AUM of $115.6 million, the fund charges 75 basis points in expense ratio (read: ETFs to Play New Trends Triggered by COVID-19).

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