Should You Play this Video Games ETF?

Cash in on the video gaming craze with this fund.

(Image credit: Getty Images)

Video games aren’t just games. They are also TV content, judging by the millions of people who watched some 1.75 billion hours of streamed video-gaming programming on Twitch, the live-stream platform for gamers, just in May alone. They’re live events, too, with thousands of people showing up to watch top-level gamers face off in e-sports arenas. That makes video games big, big business. Consultant Research and Markets forecasts that the global video-game market will increase revenues at a 6.4% annualized rate between 2019 and 2024, when it will hit $179.1 billion in sales.

Global X Video Games & Esports ETF is one of a handful of funds that allow investors to cash in on that growth. HERO sports a tight portfolio of 40 firms involved in developing, publishing, distributing or streaming video games, producing related hardware, or operating e-sports leagues or teams. The fund weights holdings by market value, so the larger the stock, the more HERO invests in it. Gaming is global, and so is HERO; it has 71% of assets invested outside of the U.S.

The ETF will only invest in companies that derive at least 50% of their revenues from video game–related businesses. That means you won’t see tech conglomerates such as Sony and Microsoft in the fund. You will see graphics chipmaker Nvidia, whose products power high-end gaming rigs; Chinese internet and video gaming company NetEase; and familiar Japanese powerhouse Nintendo. “If it’s a leading company in the theme, we want to own that company,” says Pedro Palandrani, research analyst at Global X ETFs (opens in new tab).

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%
https://cdn.mos.cms.futurecdn.net/flexiimages/xrd7fjmf8g1657008683.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of Kiplinger’s expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of Kiplinger’s expert advice - straight to your e-mail.

Sign up
Kyle Woodley
Senior Investing Editor, Kiplinger.com

Kyle is senior investing editor for Kiplinger.com. As a writer and columnist, he also specializes in exchange-traded funds. He joined Kiplinger in September 2017 after spending six years at InvestorPlace.com, where he managed the editorial staff. His work has appeared in several outlets, including U.S. News & World Report and MSN Money, he has appeared as a guest on Fox Business Network and Money Radio, and he has been quoted in MarketWatch, Vice and Univision, among other outlets. He is a proud graduate of The Ohio State University, where he earned a BA in journalism.