Pacer Launches Digital Entertainment ETF | ETF strategy



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Pacer ETFs has launched a new thematic equity ETF offering exposure to companies around the world specializing in digital entertainment.

Sean O’Hara, president of Pacer ETF Distributors.

the ETF Pacer BlueStar Digital Entertainment (ODDS US) is designed as a one-stop solution for investors looking to access multiple segments of digital entertainment, including online gambling, video games and esports.

The fund is listed on Nasdaq with a fee rate of 0.60%.

According to Pacer, the ETF’s underlying companies have not only benefited from the consumer shifts brought about by the Covid-19 pandemic, but are poised for further growth due to persistent tailwinds such as the growing digital footprint of generation to generation, the widespread adoption of augmented and virtual reality, and the reduction of restrictions in the gambling market.

Sean O’Hara, President of Pacer ETF Distributors, said, “It’s undeniable that consumers around the world are spending more time consuming media, playing online video games and gaming, and businesses are adapt to improve the revenue sources of these trends.

“As leaders in the thematic ETF space, we believe that a passive, rules-based approach providing exposure to both online gambling operations and gaming or esports via an ETF can be advantageous to offer at this time.”

Methodology

The fund is linked to BlueStar Global Online Gambling, Video Gaming, and eSports Index which selects its constituents from a universe of global equities with market capitalizations greater than $150 million and average daily trading volumes greater than $1 million.

The methodology selects companies operating in a range of industries related to the theme of digital entertainment, including online gaming platforms; online game software; video game development; video game software and hardware; streaming services; eSports operators; and eSports software and hardware.

The companies identified at the end of the selection process are classified into one of two categories: online gambling or video games and eSports.

Within each compartment, the methodology selects the largest companies while targeting a minimum of 25 constituents and at least 90% of the total market capitalization of the compartment.

The weight of each bucket is fixed at 50%. Within each fund, constituents are weighted by free float-adjusted market capitalization while capping most stocks at 8%, with the exception of semiconductor companies which are capped at 3%. Replenishment and rebalancing take place semi-annually.

As of April 14, almost a quarter (23.2%) of the index was allocated to stocks listed in the United States, with the other countries most exposed being the Cayman Islands (16.5%), Japan ( 11.0%), Sweden (10.9%), and Australia (9.2%).

Consumer discretionary and communication services stocks dominated with weightings of 45% each, with the remaining weight attributed to the information technology sector.

Notable positions included Evolution AB (8.5%), Tencent (8.4%), Aristocrat Leisure (8.1%), Flutter Entertainment (7.8%) and Entain (5.6%).

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