Back to top

Image: Shutterstock

Gaming ETFs to Gain Post Apple-Epic Games Ruling

Read MoreHide Full Article

Gaming stocks jumped in the Sep 10 trading session, following the Apple (AAPL - Free Report) -Epic Games lawsuit ruling. U.S. District Judge Yvonne Gonzalez Rogers in Oakland, CA ruled that the iPhone maker can no longer force developers to use in-app purchasing.

Apple has been forced to change its App Store policies and loosen its grip over in-app purchases following the federal court ruling. Epic Games, the maker of “Fortnite,” brought the lawsuit, arguing that Apple was improperly taking advantage of monopoly power and harming competition. The ruling comes as a huge boon for the gaming companies including streaming media, entertainment and publishing.

CNBC states that Apple’s App Store revenues are made up almost entirely of users playing games. According to the ruling, gaming apps accounted for approximately 70% of all App Store revenues. As such, game makers can now avoid Apple’s 30% fee and use cheaper payment processors, which should help gaming companies bolster profit margins, per a Bloomberg report (read: Soaring Video Games Sales to Keep Boosting Gaming ETFs).

Shares of AppLovin, which owns several game studios, climbed 8.8%, while mobile game developer Zynga ) and Playtika rose more than 6%. Roblox RBLX, a gaming app for kids, gained almost 3%. Activision Blizzard (ATVI - Free Report) and Electronic Arts (EA - Free Report) also rose about 3% each on the day while Unity Software (U - Free Report) was up 3.7% higher. The lawsuit also boosted other companies that use Apple’s App Store, including Spotify (SPOT - Free Report) , Match Group (MTCH - Free Report) and Duolingo DUOL.

The future of the global gaming market looks bright as people are increasingly turning to games. The mobile/tablet gaming has been witnessing rapid growth owing to introduction of new smart phones/tablets with enhanced features to play video games without having to connect an external device/console. Games and e-sports analytics firm Newzoo projects the global game market to witness a healthy CAGR of 8.7% from $175.8 billion in 2021 to $218.7 billion in 2024, surpassing the $200-billion threshold in 2023.

ETFs to Play

While investing in gaming stocks could reward investors, a diverse approach in a basket form can also be a great choice. For this, investors can binge on the following ETFs.

Wedbush ETFMG Video Game Tech ETF (GAMR - Free Report)

This ETF offers exposure to the companies involved in the electronic gaming industry, including the entertainment, education and simulation segments, by tracking the EEFund Video Game Tech Index. It holds 135 stocks in its basket and charges 75 bps in annual fees. The fund has amassed $108.7 million in its asset base and trades in volume of about 27,000 shares a day on average.

VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report)

This fund offers exposure to global companies involved in video game development, esports, and related hardware and software by tracking the MVIS Global Video Gaming and eSports Index. It holds 26 stocks in its basket with American firms accounting for 47% of the portfolio, while Japan and China round off the next two with a double-digit allocation each. The fund has gathered $728.4 million in its asset base while trading in an average daily volume of 73,000 shares. It charges 55 bps in annual fees from investors (read: Sports Betting ETFs Set to Soar on NFL Wagers).

Global X Video Games & Esports ETF (HERO - Free Report)

This ETF offers exposure to companies that develop or publish video games, facilitate streaming and distribution of video gaming or e-sports content, own and operate within competitive e-sports leagues, or produce hardware used in video games and e-sports, including augmented and virtual reality. This can be easily done by the Solactive Video Games & Esports Index. Holding 40 securities in its basket, the fund has AUM of $565.2 million and charges 50 bps in annual fees. It trades in an average daily volume of 109,000 shares.

Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD - Free Report)

This fund offers retail and institutional investors exposure to 34 e-sports & digital entertainment stocks by tracking the Roundhill BITKRAFT Esports Index. The index consists of a modified equal-weighted portfolio of globally listed companies that are actively involved in the competitive video gaming industry. From a country exposure, the United States and China take the largest share at 28.2% and 22.1%, respectively, while Japan, South Korea and Sweden round off the next three spots. NERD has accumulated $82.1 million in its asset base while trading in an average daily volume of 23,000 shares. It charges 50 bps in annual fees and expenses.

Roundhill Sports Betting & iGaming ETF (BETZ - Free Report)

With AUM of $408.3 million, this fund is designed to offer retail and institutional investors global exposure to sports betting and iGaming industries by tracking the Roundhill Sports Betting & iGaming Index. The fund holds 42 stocks in its basket with American firms accounting for the largest share at 36.8%, followed by 12.5% allocation in Malta and 9.7% in Australia. It charges 75 bps in annual fees and trades in an average daily volume of 180,000 shares.

Published in