No Playing Around: Video Game ETF Is On A Roll

The ETFMG Video Game Tech ETF GAMR is for real. While broader equity benchmarks were volatile to end May, GAMR, the only exchange traded fund dedicated to the video game investment theme, made a series of record highs.

On Thursday, the last trading day of May, GAMR was one of just 15 ETFs hitting all-time highs. The ETF finished the month higher by more than 12 percent, bringing its year-to-date gain to about 11.33 percent.

What Happened

GAMR, which turned two years old in March, follows the EEFund Video Game Tech Index and holds 58 stocks. Over 71 percent of GAMR's components are classified as home entertainment software, technology hardware and storage and Internet software providers, meaning the fund provides exposure to some stocks that are smaller components of traditional, diversified technology ETFs.

ESports, particularly in international markets, is seen as a major growth driver for the video game industry going forward.

“Bank of America Merrill Lynch analyst Justin Post said in a recent note to clients that he predicts e-sports could generate direct revenue of over $900 million this year and $1 billion in 2019,” according to Yahoo Finance.

Why It's Important

Perhaps more than any other ETF, GAMR is positioned to take advantage of the eSports boom — and it's a credible one. 

“In 2017, the global e-sports market was valued at nearly $493 million. According to the source's estimates, global e-sports market revenue will reach $1.65 billion in 2020,” according to Statista.

“The e-sports industry is expected to grow rapidly in the coming years. In 2015, worldwide revenues generated in the e-sports market amounted to $325 million. At the pace of 40-percent year-on-year growth, the market is expected to generate close to $1.5 billion in revenue by 2020."

What's Next

Near-term catalysts exist for GAMR as well, including the releases of some widely anticipated new games. The second half of 2018 is chock full of widely awaited new game launches. A new “Spider-Man” game is due out in September, as is a new installment in the “Tomb Raider” franchise.

The important fourth quarter will see a new “Call of Duty” installment in October as a well as a “Red Dead” sequel later that month.

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