A new gaming ETF hits the market

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June 25, 2019 3:04pm ETF BASIC NEWS

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From Todd Shriber: Another exchange traded fund dedicated to the fast-growing video game industry is here. As was previously noted in this space, the Defiance Future Tech ETF was to be replaced by the Defiance Next Gen Video Gaming ETF VIDG 1.59%. VIDG made its debut on Monday.

What Happened

The new VIDG tracks the BlueStar Next Gen Video Gaming Index. BlueStar serves as the index provider for Defiance’s other two ETFs.

That index “is a rules-based index that tracks the performance of a group of stocks of global companies involved in a range of industries, collectively defined by BlueStar Indexes as Interactive Entertainment Index components are reviewed semi-annually for eligibility, and weights are re-set according to a tiered market capitalization weighting strategy,” according to Defiance.

Why It’s Important

VIDG is the second video game ETF to debut this year following the Roundhill BITKRAFT Esports and Digital Entertainment ETF NERD 1.71%, which launched earlier this month.

With video games being a more than $100 billion industry and esports revenue surging, ETF issuers are betting that the market can hold multiple offerings on this front. For its part, the new VIDG features exposure to nine industry with weights ranging from 1.41% to 76.28%.

In addition to the 76.28% to video game makers and publishers, the new ETF has exposure to console manufacturers, e-sports and online gambling. None of VIDG’s holdings exceed weights of 5%. Familiar names at that weight in the new ETF include Electronic Arts (NASDAQ:EA) and Activision Blizzard (NASDAQ:ATVI).

“We believe that deep changes brought about by mobile technology advances encompassed in 5G, developments in machine learning and cross-industry partnerships by alert first-movers, could propel expansion in this field far beyond the traditional kid-in-his-bedroom model of gaming,” said Defiance. “Recent changes have brought global networked play, full-game downloads and in-game content, all of which indicate how the next generation of gaming could propel this innovating sector even further.”

What’s Next

While there is clearly increasing competition in the video game ETF space, VIDG may have something of an advantage with its annual fee of just 0.30%. Among video game ETFs, only NERD is cheaper with an annual expense ratio of 0.25%.

VIDG’s fee is the same as the Defiance Next Gen Connectivity ETF’s FIVG 1.01% and that ETF already has almost $86 million in assets under management after debuting in March.

The Defiance Next Gen Video Gaming ETF (VIDG) was trading at $23.37 per share on Tuesday afternoon, down $0.44 (-1.85%). Year-to-date, VIDG has declined N/A%, versus a 9.55% rise in the benchmark S&P 500 index during the same period.

VIDG currently has an ETF Daily News SMART Grade of NR (Not Rated), and is unranked among 86 ETFs in the Global Equities ETFs category.

This article is brought to you courtesy of Benzinga.

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