Entertainment exchange-traded funds (ETFs) offer the opportunity to make some income from the industry with less risk than buying individual stocks. But which are the best entertainment ETFs to buy right now? Check out our top picks below.
Best Entertainment ETFs
Invesco Dynamic Leisure and Entertainment ETF (NYSEARCA: PEJ)
The Invesco Dynamic Leisure and Entertainment ETF follows the Dynamic Leisure & Entertainment Intellidex℠ Index, historically sharing at least 90% of the same assets.
Allocations for the market cap are pretty well split between large, small, and mid-cap stocks. There’s a similar distribution of value, growth, and blended stocks with the hope of reducing risk.
Created in 2005, the Invesco Dynamic Leisure fund has remained close to its index, up just shy of 6% overall. Current performance has been a struggle for PEJ and the entertainment industry as a whole.
It won’t surprise anyone to hear the ETF houses 30 stocks from the leisure and entertainment industries the fund is named for. The fund combines eating, lodging, travel, sports, and television networks.
The five highest-weighted holdings each account for over 5% of the fund, with others trailing just a little behind.
Top exposure goes to McDonald’s Corp (NYSE: MCD), Hilton Hotels Corporation (NYSE: HLT), and Warner Bros Discovery Inc (NASDAQ: WBD).
There’s a small 0.53% dividend at present, while the ETF holds back on some cash. This might cover your 0.55% expense ratio as you wait for the fund to head in the right direction.
VanEck Video Gaming and eSports ETF (NASDAQ: ESPO)
VanEck’s Video Gaming and eSports ETF focuses primarily on video game development and the hardware and software needed to create content. It also includes a selection of stocks playing a role in the eSports space.
It contains entertainment companies bringing in most of the revenue from the above areas.
Top holdings include graphics processing unit creator Nvidia Corp (NASDAQ: NVDA), video game creator Activision Blizzard Inc (NASDAQ: ATVI), and Nintendo Co Ltd (TYO: 7974). There are 25 holdings in all.
Nearly 40% of the ETF’s holdings come from the US, with Japanese companies making up 24% of the total. China, Taiwan, and Australia round out the top five.
Almost every net asset is a large market capitalization growth stock, with only 7% falling into the mid-cap range. Total assets under management come in at $250 million.
Growth stocks have been struggling a bit lately with the stock market outside a bull run. ESPO is feeling the burn as it waits for earnings momentum to turn around. It remains tied to the MVIS® Global Video Gaming and eSports Index.
While ESPO sits low, folks could take advantage of a 5.69% annual dividend yield. There is a 0.55% expense ratio to maintain a stake in the ETF.
Communication Services SPDR Fund (NYSEARCA: XLC)
The Communication Services SPDR Fund seeks to maintain a portfolio mimicking the Communication Services Select Sector Index.
Holdings come mainly from interactive media, services, and entertainment. There’s a small telecommunications component as well.
The 25 holdings making up XLC are domestic companies. The stocks carrying the most weight include Meta Platforms Inc (NASDAQ: META), formerly known as Facebook, and Google’s parent company Alphabet’s class A (NASDAQ: GOOGL) and class C (NASDAQ: GOOG).
With these big names at the helm, XLC looks favorable to potentially rebound at some point in the future.
Current assets under management total $8.2 billion. The fund also has nearly $380 million in net cash that its management team can use to change up plays.
Both XLC and the fund’s underlying benchmark are down this year and are at a break-even point from its June 2018 inception. If you pick up shares of XLC now, you could collect the 1.16% dividends paid out every three months.
The fund looks great regarding management fees, collecting only 0.10%. This is a measly $10 on a $10,000 investment.
VanEck Vectors Gaming ETF (NASDAQ: BJK)
The second VanEck fund on our list, VanEck Vectors Gaming ETF, has a handle on sports betting, lottery services, and the overall casino industry.
It also has game exposure with services, tech, and equipment companies from the gaming industry.
Roughly 12% of BJK’s assets come from real estate.
Net asset value eclipses the $68 million mark among 36 total holdings.
The highest weighted businesses are gambling company Flutter Entertainment PLC (LON: FLTR), real estate investment trust Vici Properties Inc (NYSE: VICI), and casino/resort company Las Vegas Sands (NYSE: LVS).
Stocks found within the Vectors Gaming ETF come from 14 different countries. The United States accounts for approximately half of total assets.
The fund focuses on the MVIS® Global Gaming Index and has done so since its inception in early 2008. Like many other entertainment ETFs, BJK has seen its share of rises and falls since then.
Along with its sibling ETF on this list, over 80% of Vectors Gaming holdings are large market cap growth stocks. Buying at the right point in an economic downturn could bring about nice gains when the market becomes bullish again.
Covid-19 reduced the fund’s paid dividends to shareholders and could likely be around 1% this coming December. The gross expense ratio is 0.62%.
Global X Video Games & Esports ETF (NASDAQ: HERO)
Global X Video Games & Esports ETF invests in video game developers, publishers, and companies that stream and distribute content to the masses.
Its strategy stretches to esports content and hardware used to make all the above possible.
A relatively new ETF, HERO joined the fray in late 2019 and walked right into the Covid-19 pandemic. Despite hard hits over the last few years, NAV is still up 7% from inception.
Assets span the globe, with the heaviest concentrations in the United States, Japan, South Korea, and China. In all, these companies add up to $164 million in value.
Fifty holdings comprise the fund, with the top six spots going to video game developers.
Roblox Corp (NYSE: RBLX) has nearly 8% of HERO’s weight, with Electronic Arts Inc (NASDAQ: EA) and Take-Two Interactive Software Inc (NASDAQ: TTWO) not far behind.
The ETF hopes to ride the technology wave as the global gaming market thrives. A small 0.44% biannual yield could put a little passive income into your pocket while you wait.
Wedbush ETFMG Video Game Tech ETF (NYSEARCA: GAMR)
Wedbush’s ETF with the GAMR tag is a pure play targeting video game tech. It is the first of its kind to target the area and hopes to ride the upward momentum the industry continues to have.
The fund does have a higher expense ratio than most, currently 0.75%. Although currently in a dip, GAMR is still nearly 100% higher than its share price at inception in 2016.
Almost 70% of the companies within come from the United States, Japan, and South Korea. A dozen more countries also play a part in the fund’s current holdings.
With 94 total assets, GAMR has the most stocks of any ETF on our list. These companies equal $51 million in assets under management.
CD Projekt SA (GPW: CDR), Roblox Corp (NYSE: RBLX), and Capcom Co Ltd (TYO: 9697) make up the top three spots. Each company develops and produces games.
People joining the GAMR club now receive a decent 4.5% dividend yield.
Are Entertainment ETFs a Good Investment?
Entertainment ETFs have a lot going for them that could make them a good investment.
These securities are lying low right now, waiting for market momentum to turn more bullish.
They consist primarily of growth stocks with a more long-term approach to gains but are susceptible to downturns like we’re seeing right now.
The entertainment industry is finding its place again after climbing out of the worldwide pandemic. Some sectors, like video games, actually grew during that time.
ETFs, in general, tend to be lower-risk investments since they cover a broader market. When one sector or country has economic challenges, another can come along and help send share price momentum back up.
If the market gains some ground in the near future, grabbing an entertainment ETF at a current low could spell some nice profits down the line.
Where to Buy Entertainment ETFs
You can pick up entertainment ETFs from any online broker. These exchange-traded funds exist on major exchanges and can be bought or sold just like common stock.
Our favorite online brokers are Robinhood and Webull. Both offer commission-free trading you can perform from the comfort of your own home.
Robinhood tends to be more user-friendly, whereas Webull has great tools for experienced traders to sink their teeth into.
Each entertainment ETF draws from a revolutionary industry still finding its place in the world post-pandemic.
Things may not be back to normal yet, but people are traveling, staying in hotels, and still consuming media and video games like no one’s business.
If the stock market gets the hint, we could see these lucrative ETFs really take off.
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