A memorable ticker symbol for a stock or fund doesn’t guarantee success, but at least it gets people to notice that it exists.
And so it is with the Roundhill BITKRAFT Esports & Digital Entertainment ETF, which goes by the ticker NERD. What also might help this product is that it targets the fast-growing esports and online gaming markets that are projected to keep growing rapidly in the near future.
NERD is sponsored by Roundhill Investments, a New York City-based registered investment advisor that describes itself as a developer of financial products offering exposure to so-called next-generation investment themes.
For this, its first ETF, Roundhill created the underlying index in collaboration with BITKRAFT Esports Ventures, an early- and mid-stage investor in the esports sector.
The Roundhill BITKRAFT Esports Index contains 25 companies from 11 countries involved in esports or related activities including video game publishing, development and/or streaming platforms; organizing video game tournaments and/or events; and operating and/or owning video game leagues or video game teams. It also holds gaming hardware and technology companies.
Index constituents fall into three categories: Pure plays with business models directly tied to the esports industry; “core” companies with substantial operations and/or growth prospects linked to esports; and “non-core” companies that get most of their revenue from digital entertainment activities not directly related to esports.
As of May 31, the U.S. was the largest country weight at 21 percent, followed by China (16 percent), South Korea (13 percent), Japan (12 percent) and Singapore (9.7 percent).
The top five holdings were AfreecaTV Co. Ltd., a South Korean media company; Sea Ltd., a Singapore firm classified as broad-based; U.S. gaming company Activision Blizzard Inc.; Modern Times Group, a Swedish media company; and South Korean gaming company Nexon GT Co. Ltd.
According to fund literature, 2.3 billion people play video games and 454 million people watch esports worldwide. Various industry forecasts call for sustained growth in these areas into the foreseeable future.
Thanks to a fee waiver, the NERD fund’s expense ratio is 0.25 percent for the first year. According to a press release announcing the launch, Roundhill intends to boost the fee to 0.50 percent annually after the first year.