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ETFs to Ride on Rising Gaming Fervor Amid Coronavirus Scare

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The coronavirus pandemic has taken a toll on economic activities worldwide, resulting in suspension of professional sports games, cancelation of major events, conferences and conventions, prohibition of mass gatherings, travel bans, half-empty restaurants, school closures, and mandatory work-from-home policies (read: Coronavirus Panic to Send Economy Into Recession: ETF Picks).

This situation has been acting as a huge tailwind for gaming and live streaming companies such as Activision Blizzard (ATVI - Free Report) , Tencent Holdings (TCEHY - Free Report) , and Electronic Arts (EA - Free Report) , especially over the past week as most people have opted to stay home and are passing time by playing games and watching live videos.

Global Gaming on the Rise

According to a new report from StreamElements and Arsenal.gg, which monitor usage in the live-streaming industry, global viewership has increased over the past week on multiple platforms. Global viewership has increased by 10% on Twitch and 15% on YouTube Gaming — both of which reflect the popularity of livestreaming currently. .

Per Verizon, U.S. video game usage during peak hours has jumped 75% since the quarantine first went into effect last week. Meanwhile, video streaming increased by 12%, Overall web traffic is up nearly 20% while social media usage has been flat.

The online digital games marketplace, Steam broke a record with users peaking to 20 million a day. The most popular games include the military-themed multiplayer shooter Counter-Strike: Global Offensive, which recorded one million players on Mar 14, as well as Valve’s DOTA 2, Ubisoft’s Rainbow Six: Siege, and the seemingly immortal Grand Theft Auto V. The strong trend is likely to continue given the increasing engagements in games to pass time indoors and with the release of VR title Half-Life: Alyx on Mar 23 (read: Amid the Tech Slump, Internet ETFs Most Resilient to Virus).

In Italy, live streamed gaming content has increased by 66% in terms of hours watched, according to StreamElements. Italy-based telecommunications company, Telecom Italia, recorded a 70% increase in Internet activity last week. Most of the growth is attributed to online games like Fortnite and Call of Duty. China-based live-streaming service Douyu also experienced increased viewership of the country's most popular games. In particular, Call of Duty: Warzone was released by Activision Blizzard on Mar 10 and hit 15 million players in three days, surpassing the previous download record set by Electronic Arts’ Apex Legends. Notably, Warzone is now the fastest video game download growth on console and PC platforms.

The video games will continue to see outsized growth at least in the near term as directives for ‘social distancing’ continue around the world and people look for stay-at-home entertainment. Additionally, Nintendo's Animal Crossing: New Horizons and Doom Eternal launching on March 20 will also provide a nice boost to gaming stocks.

ETFs on a Roll

While investing in any of the gaming stocks could reward investors amid ongoing coronavirus scare, a diverse approach in a basket form can also be a great choice. For this, investors can splurge on the gaming corner of the broad technology industry with the following ETFs.

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

This fund offers exposure to global companies involved in video game development, e-sports and related hardware and software by tracking the MVIS Global Video Gaming and eSports Index. It holds 25 stocks in its basket with each accounting for less than 9.5% share. U.S. firms account for more than one-third of the portfolio, while Japan and China round off the next two with a double-digit allocation. The fund has gathered $100.8 million in its asset base while trading in average daily volume of 38,000 shares. It charges 55 bps in annual fees from investors.

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 esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality. This can be easily done by the Solactive Video Games & Esports Index. Holding 41 securities in its basket, the fund is well spread across components with none accounting for more than 6.4%. It charges 50 bps in annual fees and trades in average daily volume of 46,000 shares. The ETF has AUM of $60.9 million (read: Best Thematic ETFs for 2020: Cloud, Internet of Things & More).

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

This fund offers retail and institutional investors exposure to e-sports & digital entertainment by tracking the Roundhill BITKRAFT Esports Index. The index consists of a modified equal-weighted portfolio of globally-listed companies who are actively involved in the competitive video gaming industry. Holding 25 stocks in its basket, the ETF is well spread across them with none making up for more than 8.1% of assets. From a country exposure, China and the United States take the largest share at 25.5% and 20%, respectively, while Japan, Singapore and South Korea round off the next three spots. NERD has accumulated $9.7 million in its asset base while trading in average daily volume of more than 11,000 shares.  It charges 25 bps in annual fees and expenses.

iShares Evolved U.S. Media and Entertainment ETF (IEME - Free Report)

This newly actively managed ETF employs data science techniques to identify companies with exposure to the media and entertainment sector. It holds 88 stocks with each accounting for less than 7.9% share in its basket. The fund has accumulated $4.8 million in its asset base and charges 18 bps in annual fees. It trades in a paltry volume of around 4,000 shares (read: ETFs to Gain on Disney's Q1 Earnings & Solid Subscriber Growth).

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