4 Fund Winners From a Flourishing Gaming Industry
The coronavirus pandemic has forced people to depend on in-house entertainment as cinemas and theaters continue their “door-closed” policy to prevent it spread. With kids staying indoors and adults hunting for fun activities and entertainment during leisure time, the gaming industry is experiencing a boom. Per Simon-Kucher & Partners and Dynata’s The Global Gaming Study: Impacts of COVID-19 report in May-June 2020, there is a 30% rise in gamers, who stay occupied for more than five hours per week. In fact, there is a 39% increase in monthly expenditure on video games. The study on more than 13,000 people across 17 countries confirms that gaming preferences and behavior adopted during the pandemic will remain even after it eases.
Additionally, latest reports from NDP highlights that there was a 37% jump year over year in spending across video game hardware, software and accessories during August. The month saw a $3.3 billion rise in sales and puts year-to-date spending in this space at $29.4 billion, which is 23% higher than the same period last year.
The VanEck Vectors Video Gaming and eSports ETF (ESPO) has added nearly 58% so far this year compared to the S&P 500’s rise of 3.9%. Per a Mordor Intelligence study, the global gaming market was valued at $151.55 billion in 2019 and is expected to reach $256.97 billion by 2025, at a CAGR of 9.17% over the forecasted period. What boosts this space more is the emergence of cloud gaming, which offers facilities like game scene rendering, game logic processing video encoding, and video streaming.
IPO’s Boosting the Space
Recent rally in the gaming space has also encouraged private gaming companies to go public. On Sep 17, videogame-engine company, Unity Software Inc. went public. This company makes a software engine that designers use to create videogames. Unity will be trading on the New York Stock Exchange under the ticker symbol U and was priced at $52 per share at the IPO. The company aims to bring in at least $1.3 billion at a valuation of $13.7 billion at that price.
4 Top Fund Picks
We have thus, highlighted four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) and invest in companies that can make the most from the momentum in the gaming space. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.
The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Technology Portfolio FSPTX aims for capital appreciation. The fund invests primarily in equity securities, especially common stocks of companies that are engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements. FSPTX is a non-diversified fund and has returned 29.2% and 29.6% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSPTX has an annual expense ratio of 0.71%, which is below the category average of 1.29%. The fund has no minimum initial investment. Some of the fund’s top gaming stock holdings are Microsoft and Facebook.
Putnam Global Technology Fund Class A PGTAX aims for capital appreciation. The fund invests the majority of its assets in common stocks of companies in the technology industries. PGTAX is a non-diversified fund and has returned 28.7% and 29.4% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PGTAX has an annual expense ratio of 1.16%, which is below the category average of 1.29%. The fund has a minimum initial investment of $500. Some of the fund’s top gaming stock holdings are Tencent Holdings and Activision Blizzard.
DWS Science and Technology Fund - Class A KTCAX aims for capital growth. The fund invests the majority of its assets in common stocks of science and technology companies. KTCAX is a non-diversified fund and has returned 27.4% and 21.4% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
KTCAX has an annual expense ratio of 0.93%, which is below the category average of 1.29%. The fund has a minimum initial investment of $1,000. Some of the fund’s top gaming stock holdings are Microsoft and Activision Blizzard.
T. Rowe Price Global Technology Fund PRGTX aims for long-term capital growth. The fund invests most of its assets in the common stocks of companies that its managers expect will generate the majority of their revenues from the development, advancement and use of technology. PRGTX is a non-diversified fund and has returned 24.1% and 26.3% in the past three and five years, respectively.
This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRGTX has an annual expense ratio of 0.88%, which is below the category average of 1.29%. The fund has a minimum initial investment of $2,500. Some of the fund’s top gaming stock holdings are Microsoft and Tencent Holdings.
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