The Harvest Sports & Entertainment Index ETF debuted on Nov. 5, offering exposure to areas as diverse as gambling websites, video games, running shoes, ticket agencies and big-league sports teams. The fund joins the two-year-old Evolve E-Gaming Index ETF in aiming to profit from popular pastimes.<\/p>\n
Both ETFs track thematic indexes. Harvest invests in the 40 names that constitute the Solactive Sports & Entertainment index, while Evolve\u2019s 50-stock portfolio replicates the Solactive eGaming index.<\/p>\n
Toronto-based Evolve Funds Group Inc., mainly a sponsor of thematic funds, has seen solid returns since the e-gaming ETF launched in June 2019, with the fund delivering an annualized 27.2% return since inception to Oct. 31.<\/p>\n
Like beer sold at major-league games, these ETFs charge premium prices for thematic indexing. Harvest\u2019s management fee is 50 basis points and Evolve\u2019s is 70. In comparison, management fees for equities ETFs tracking broad-market U.S. and Canadian indexes are commonly in single digits.<\/p>\n
Harvest\u2019s launch coincides with the reopening of arenas, stadiums and other entertainment venues, which had been closed to curb the spread of the Covid-19 pandemic. \u201cThe stadiums were empty for the better part of the past 18 months, and they\u2019re now starting to fill up again,\u201d said Michael Kovacs, president and CEO of Oakville, Ont.-based Harvest Portfolios Group Inc. \u201cWe\u2019re seeing growth resurgence in that area.\u201d<\/p>\n
The revival of mass entertainment is bullish for the 25% of the Harvest portfolio that\u2019s allocated evenly between professional sports \u2014 including its holding in the British soccer team Manchester United \u2014 and ticketing and events-related holdings such as Live Nation Entertainment Inc. Another 25% of the portfolio is dedicated to sports apparel and equipment, such as Foot Locker Retail Inc. and fitness equipment provider Peloton Interactive Inc.<\/p>\n
The remaining half of the Harvest portfolio is divided into equal portions of internet gambling and e-gaming stocks, which are experiencing faster growth in revenue and popularity than traditional sports.<\/p>\n
For example, sports betting is now legal in 32 U.S. states, up from only seven in 2019. \u201cWe\u2019ve got this whole side of the market that\u2019s growing as regulations lighten up,\u201d Kovacs said.<\/p>\n
Raj Lala, Evolve\u2019s president and CEO, said his company\u2019s e-gaming ETF is a pure play that\u2019s global in scope and has very little overlap with broad market indexes. Only three of the ETF\u2019s holdings are also constituents of the NASDAQ 100 index, and only three overlap with the S&P 500 composite index.<\/p>\n
\u201cWhat we can say to investors very confidently,\u201d Lala said, \u201cis that by utilizing a fund that capitalizes on a theme like this, you are getting exposure to companies that you most likely don\u2019t already have exposure to.\u201d<\/p>\n
Lala said the e-gaming industry grew to an estimated US$176 billion in revenue this year, or two-and-a-half times the size of the film and music industries combined.<\/p>\n
Publishers have developed multiple revenue streams to engage consumers, including sponsorships and advertising. \u201cIt\u2019s not just people playing or competing in games,\u201d Lala said. \u201cIt\u2019s people watching other people play games as well.\u201d<\/p>\n
Pandemic-driven lockdowns contributed to the boom in e-gaming as people spent more time at home and had fewer opportunities for in-person recreation. This raises the question of whether reopening will reverse those gains.<\/p>\n
While Lala believes there will be less at-home e-gaming as people return to work, school or vacationing, he said the key drivers of future growth will be the world\u2019s four billion smartphones and the rollout of 5G network technology.<\/p>\n
\u201cWe think we\u2019re entering that next leg of growth opportunities within e-gaming,\u201d Lala said, \u201cwhich is the mobile functionality and faster connection speed.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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