Positive secular trends are driving the long-term growth of gaming and esports. Research house Newzoo forecasts that 2021’s global games market will generate revenues of $175.8 billion. [1] There are already 3 billion players worldwide. [2]
With advancements in 5G and internet technologies – currently being rolled out in Australia and globally – this could accelerate the growth of mobile gaming as it will allow more sophisticated games to be played on hand-held devices.
Another supportive trend is the change in consumer preferences, with consumers increasingly going for interactive, not just passive, entertainment. Mixing social media and gaming allows them to bring their friends into the interactive online world. Like gaming, esports has also been propelled by internet technologies and expanding bandwidth.
The sector offers returns that outstrip those on technology. Based on back-testing, ESPO's index (the MVIS Global Video Gaming & eSports Index), adjusted for ESPO's management cost of 0.55% per annum has outpaced the tech-heavy NASDAQ 100 index over seven years from 2014 to 30 June, 2021, with around double the returns.
Importantly, the video-gaming and esports investment opportunity also presents diversification away from the FAANGM mega-cap tech giants) Facebook, Amazon, Apple, Netflix, Google owner, Alphabet and Microsoft.
Reflecting strong investment demand, VanEck’s Video Gaming and eSports ETF (ASX: ESPO), for example, is one of its fastest-growing ETFs since it launched in Australia in 2020, drawing assets under management of around $100 million in just eight months.
Clean energy
Another huge structural growth theme is clean energy, which has also been a recent focus for investors in the wake of the US re-committing to the Paris Agreement. The Paris climate agreement is driving demand for green, renewable energy across the globe away from fossil fuels. This is a significant long-term trend, again offering huge investment potential.
The US Energy Information Administration (EIA) forecasts that power generation coming from renewable sources, such as wind, solar, hydro and geothermal, should provide almost half of the world’s electricity generation by 2050. [3]
This move to clean energy is being driven by governments adopting renewable-energy policies to meet the Paris Agreement and reduce carbon emissions. Carbon footprint is therefore an important consideration when evaluating investment products that claim to help combat climate change.
VanEck was first to market with its Global Clean Energy ETF on ASX (ASX: CLNE). The ETF tracks the S&P Global Clean Energy Select Index, considered the market benchmark for clean energy. The ETF provides exposure to 30 of the largest, most liquid global companies involved in clean-energy production and related technologies and equipment.