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ETF Review: GAMR

In response to call from a listener, I researchd the ETF GAMR. GAMR is a niche ETF dedicated to the gaming industry.  It holds companies based anywhere in the world that are dedicated to creating video game software and hardware. A significant portion of their holdings are outside the US. 

The ETF started in March of 2016, and has attracted about $4.5 million dollars, so it is tiny in the world of ETFs. To put it in perspective, the average daily trading volume of the ETF SPY is $18 billion, 4000 times more than the total investment in GAMR. This is a red flag when it comes to liquidity. If you want to sell out of this ETF, how many interested buyers will there be at the current price point? One other negative about this ETF is the expense ratio of 0.75%, which is high in the ETF world, but not unusual for a niche ETF. 

Now for the good qualities. The fund assigns stocks to different buckets based on what they do. There is a “pure play” bucket, a “non-pure play” bucket, and a “conglomerate” bucket. The pure play bucket is where all of the companies that are dedicated to creating video game software and hardware are found. The non-pure play bucket is for companies that support the gaming industry, but do not actually design and manufacture games and hardware. These two buckets make up 90% of the total holdings, and are weighted by market cap.  The last bucket is only 10% of the holdings, and is made up of the really large firms that support these companies as part of their business. The largest holding of the ETF is Nintendo, with Game Stop and Electronic Arts being two of the others that you may recognize. 

One thing you can’t fault GAMR on is the performance since inception.  The fund is up over 20% as I write this (8/19/16), so maybe they are on to something.  I’m sure Pokemon Go hasn’t hurt that performance at all.