VanEck set to launch e-sports ETF in Australia

Investment manager VanEck will target stocks with 50 per cent or more exposure to gaming and e-sports.

Crowds at the 2019 Fortnite World Cup finals at Arthur Ashe Stadium in New York. Picture: AFP

Global investment manager Van­Eck will launch an e-sports-focused exchanged-traded fund for Australian investors in a bid to capitalise on surging interest in gaming around the world.

The VanEck Vectors Video Gaming and e-sports ETF is set to commence trading on the ASX in September and will focus on investing in the largest pure-play video gaming and e-sports companies globally.

Arian Neiron, VanEck’s managing director and head of Asia Pacific, said the ETF — which will trade under the ESPO ticker — would invest only in firms generating at least 50 per cent of revenues from gaming or e-sports.

“It is the companies that have it as their core. Microsoft has the Xbox, for example, but it is not part of their core revenue so it will not be in it,” Mr Neiron said.

“ESPO’s holdings include leading game publishers Tencent, Nintendo, Electronic Arts and Activision Blizzard, which have the potential to continue to grow their revenues at strong rates. ESPO will also invest in related software developers, streaming services, and companies involved in e-sports events.

Mr Neiron said ESPO would follow about 25 stocks in its portfolio and would charge a 0.55 per cent management fee.

Mr Neiron said COVID-19 was having a positive impact on the e-sports stocks given many people around the world had been confined to their homes and interactive video gaming was becoming an increasingly popular form of entertainment.

But he also claimed that the sector had strong long-term fundamentals to complete the bump it was getting from the pandemic.

“The e-sports and video gaming industry is growing at a breakneck pace, and is already bigger than the cybersecurity industry and robotics industry. Since 2015, video game revenues have seen an annualised growth rate of 13 per cent and it has been estimated that by 2023, video game revenues should hit $US200bn.”