How to invest in Esports?

Key Takeaways

  • Esports business is projected to grow at 9% per year for the foreseeable future that will attract more and more investment capital.
  • Esport companies are generally too small and private to easily invest in with the exception of Astralis Group.
  • However, through Exchange Traded Funds (ETFs) we can easily invest in esport companies & related technology businesses.
  • Top 5 esport ETFs are quite similar to each other in performance and fees with ESPO being the biggest.
  • Esports is undeniably a big business, and analysts forecast Esport viewership to grow at over 9% annually, according to this Business Insider article. That means viewership will likely sit at around 600 million by 2023. Investing in the industry has also seen incredible growth. From the same article, “Investments are up to $4.5 billion in 2018 from just $490 million the year before, a staggering YoY growth rate of 837%, per Deloitte. These investments are distributed to players across the ecosystem — from esports organizations to tournament operators to digital broadcasters — allowing it to function and grow. “

    This growth fuels all the supporting businesses around Esports. Think games, video cards, streaming services, merch, gaming technology, and many others. 

    The question is, how can institutional investors like us invest in Esports?

    How to invest in Esports? Actually invest and not gamble.

    The rise in Esports, like any other sport, attracts gamblers. The allure of making easy money by betting on your favorite Esports team is there, and all major betting houses are capitalizing on that. Gambling, however, is not investing and will never provide long-term sustainable results. We will explore how we can invest in Esport companies and related businesses and avoid placing any bets on Esports teams.

    Invest in Esports companies and gaming ETFs

    As mentioned before, growth in Esports has fueled growth in various related businesses. On top of that, professional sports organizations that have stocks trade publically have also created Esport arms. Because these organizations are public companies, we can easily invest in them.

    Notably, Astralis Group that houses Astralis CS:GO team, Origen League of Legends team, and Future FC FIFA team, is the first pure Esports organization to go public. 

    Researching and investing in individual companies can be time-consuming, risky, and requires in-depth financial expertise. To simplify the process, we can invest in a basket of companies with the help of ETFs. 

    Top 5 Gaming ETFs

    TickerETF NameTotal Assets 1 year Return
    ESPOVanEck Vectors Video Gaming & eSports ETF$802,241,00048%
    HEROGlobal X Video Games & Esports ETF$669,884,00057%
    BETZRoundhill Sports Betting & iGaming ETF$448,186,000N/A
    BJKVanEck Vectors Gaming ETF$154,737,00060%
    NERDRoundhill BITKRAFT Esports & Digital Entertainment ETF$101,684,00077%

    All of the listed ETFs produced incredible 1-year returns, averaging over 60% return in a year if we exclude BETZ that is under a year old at the time of writing. 

    Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD) is the highest 1-year performer with over 77% return in 1 year.

    VanEck Vectors Video Gaming & eSports ETF (ESPO) is the biggest one on the list, with over $800MM under management.

    A little about the ETF provider: VanEck has a long history of providing solutions to investors. Founded in 1955, they have an account of embracing forward-looking technologies and financial market trends. From their mission: “Through forward-looking, intelligently designed active and ETF solutions, we offer value-added exposures to emerging industries, asset classes, and markets as well as differentiated approaches to traditional strategies. We think beyond the financial markets to identify the trends—including economic, technological, political, and social—that we believe will fuel investable opportunities.”

    Constructing an Esports themed portfolio

    We can use a combination of the following ETFs to construct a portfolio. For simplicity, we can try 3-ETF, 33.33% allocation for each ETF. We want to exclude BETZ from this hypothetical scenario because it is too new to have sufficient historical data to backtest. And we also want to exclude BJK, because it holds a lot of Casino gaming stocks that are not really Esports. We will then compare this portfolio’s performance to the broader stock market.

    Notes on the risks: Obviously, this will be a risky, undiversified portfolio. If you ever plan to invest in any ETFs discussed in this article, they should remain a small part of your overall investment strategy. Please do further due diligence and do not take any information presented here as financial advice.

    Simulated Historical Performance

    Here are the results we would get if we invested in this hypothetical portfolio in December of 2019 vs. investing in popular S&P500 ETF – SPY.

    That is quite the performance. 60.28% Compound Annual Growth Rate for our Esports portfolio vs. 22.57% for SPY.

    The historical testing period is too short for this to mean anything over a longer term but it just shows that Esport business can be a lucrative investment that has performed phenomenally over the last year and a half.

    What companies are we actually buying here?

    ETFs are great way of how we can invest in Esports but what are the underlying companies we are actually buying when we purchase these.

    Here is the breakdown of Top 10 Holdings for each of the ETFs.

    ESPO Top Holdings

    NVIDIA Corporation

    Sea Ltd. (Singapore) Sponsored ADR Class A

    Tencent Holdings Ltd.

    Advanced Micro Devices, Inc.

    Nintendo Co., Ltd.

    Activision Blizzard, Inc.

    NetEase, Inc. Sponsored ADR

    Bilibili, Inc. Sponsored ADR Class Z

    Take-Two Interactive Software, Inc.

    Electronic Arts Inc.

    HERO Top Holdings

    NVIDIA Corporation

    Sea Ltd. (Singapore) Sponsored ADR Class A

    Activision Blizzard, Inc.

    Electronic Arts Inc.

    NetEase, Inc. Sponsored ADR

    Nintendo Co., Ltd.

    Embracer Group AB Class B

    Zynga Inc. Class A

    NEXON Co., Ltd.

    Capcom Co., Ltd.

    NERD Top Holdings

    Activision Blizzard, Inc.

    Modern Times Group MTG AB Class B

    Tencent Holdings Ltd.

    Corsair Gaming, Inc.

    AfreecaTV Co., Ltd.

    Sea Ltd. (Singapore) Sponsored ADR Class A

    Turtle Beach Corporation

    Razer, Inc.

    Electronic Arts Inc.

    Take-Two Interactive Software, Inc.

    As we can see there is considerable overlap. So instead of constructing a portfolio with all three, you could just invest in one.

    Between the three, it is really difficult to pick which one is the best. They perform the same, have almost identical fees. Here is how they have performed side by side over the last year and a half.

    Based on size and performance we would likely go with ESPO. It is the largest ETF in the space and is managed by a company with long history of investing in innovation.

    In any case, any of these will make a great addition to your portfolio if you are interested in Esports.


    Andy is the author behind most posts, a web site analyzing and simplifying alternative and traditional investment vehicles.

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