Investing in companies that are exposed to tailwinds can be really beneficial because of the organic boost given to it revenue. Video gaming is one of the most interesting sectors to me, so I'm going to talk about two ASX-listed exchange-traded funds (ETFs) that can provide exposure.
Video gaming can come in variety of forms these days, such as consoles, VR, web-based or apps on our phone.
There are a number of businesses involved in the ecosystem of video games, whether that's designing the games, providing the digital platforms for games, selling consoles, manufacturing the hardware and so on.
Some of the businesses that are part of the video gaming industry include Applovin, Tencent, Nintendo, Netease, Roblox, Take-Two Interactive Software, Electronic Arts, Capcom, Konami, Bandai Namco and Ubisoft.
These businesses are benefiting from the global growth of e-sports. Fortune Business Insights reported that the global e-sports market was valued at US$560.6 million in 2024. This is expected to grow at a compound annual growth rate (CAGR) of 18%, to reach US$2.07 billion by 2032. The e-sports industry is creating revenue for the video gaming sector in a number of ways including game publisher fees, media rights, merchandise, ticket sales and advertising.
Those businesses aren't listed on the ASX, but we can indirectly invest in them through ASX ETFs, such as the two below.
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Betashares Video Games and Esports ETF (ASX: GAME)
The aim of this fund is to give investors exposure to a portfolio of 40 leading global video gaming and e-sports companies. It owns some of the businesses I mentioned above.
The GAME ETF has been one of the best performing ASX ETFs over the past year, rising by around 60%.
One of the interesting things about this ASX ETF is that its holdings are spread across a few countries, not just the US. The countries with a weighting of more than 1% include: Japan (35%), the US (33.5%), China (19.2%), South Korea (6.9%), Sweden (2.4%) and Poland (1.9%).
In terms of the management cost, its annual fee is 0.57%.
VanEck Video Gaming and Esports ETF (ASX: ESPO)
This fund is largely similar, but there are some key differences. For starters, it only has 25 holdings, so on paper there is less diversification.
It owns similar names to the GAME ETF, but its allocations are different. We can see this with the country weightings of more than 1%: the US (34.2%), Japan (29.5%), China (17.7%), South Korea (6.1%), Australia (4.5%), Taiwan (2.8%), Poland (2.5%) and Sweden (1.9%).
This fund has also gone on a very strong run in recent times, rising by approximately 45% in the last 12 months.
The ASX ETF has an annual management fee of 0.55% per year, which is slightly cheaper, but close enough to be almost identical to the GAME ETF.
Either way, I think both of these funds are exposed to strong tailwinds which could help them deliver returns in the years to come.
