Harvest targets online gambling and video games
Harvest Portfolios Group, an independent Toronto-based ETF issuer, is launching a new thematic ETF that targets the sports and entertainment industry, but particularly its higher-growth areas of online gambling and professional video gaming.
The Harvest Sports & Entertainment Index ETF (HSPN) will track the Solactive Sports & Entertainment Index, which has been purpose-built for this ETF.
The index is made of five sub-industries that Purpose and Solactive believe capture the sports and entertainment theme. They are: online gambling (“iGambling”), video games (“eSports”), sports equipment and clothes, online events and entertainment, and professional sports.
Companies are fitted to the theme based on Solactive’s keyword search programme, called “ARTIS”. As part of this, companies annual and quarterly reports, press releases, etc. get parsed by Solactive to see if they fit the theme. Companies are scored based on relevance and market cap.
The top 10 companies in iGambling, eSports, and sports equipment get included. Whereas only the top five within online events and professional sports get included. The fund equally weights the 40 stocks.
Looking through the website, the end result looks like a motley group of companies from online gambling firms like DraftKings, video game studios like Electronic Arts, shoe companies like Nike, and European football teams like Manchester United.
HSPN charges 0.50%.
Bernie’s commentary – nice idea, not sure on ESG
Online sports gambling is a major growth industry, with a CAGR of 75% in the US alone, marketing material from Harvest suggests. DraftKings, which started out as a SPAC two years ago, is just the tip of the iceberg. Contrary to popular perception, gamblers aren’t always placing bets on sports teams to try and profit. They’re often passionate fans that take out an insurance policy of sorts, by better against their favourite team.
Potentially accelerating the growth of iGambling is the rise of betting on video games, or eSports. As the audiences for professional video games – like League of Legends, Dota2, FIFA, Call of Duty – grow into the tens of millions, a swelling pool of millennial eSports punters is emerging. Suggesting video games could power the growth of yet another ancillary industry. (Video games have been central to the growth of many industries, including semiconductors, cryptocurrencies like NFTs, computer hardware, streaming platforms, and social media).
In targeting these high-growth sports-like areas, I think this ETF has it right. One challenge however will obviously be winning over ESG-minded investors. A lot of people don’t like the idea of profiting from gambling, even in small doses.
Still, this seems like a safe bet. Shame about Manchester United.