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Nikko AM lists Asia’s first esports and gaming fund

Fnatic during Counter-Strike: Global Offensive game between Astralis and ENCE eSports during ESL Intel Extreme Masters 2020 (Photo by Norbert Barczyk/PressFocus/MB Media/Getty Images)

Japan’s Nikko Asset Management has launched an exchange-traded fund in Hong Kong aiming to tap into the growth of the computer games and esports industry.

In a press release Nikko AM said the ETF will invest in a spectrum of companies that will benefit from the growth of the sector. This includes game and software developers, hardware manufacturers, and companies linked with high-speed telecommunications and streaming infrastructure.

Phillip Yeo, joint global head of ETF business at Nikko AM said: “With a total revenue that exceeds the combined revenues of both the movie and music industry, egames and esports is the new entertainment medium. Even Netflix concedes that it competes (and loses) against Fortnite more than HBO.”

Speaking with SportBusiness, Yeo said the firm is launching the fund now because “the digital space has exciting growth prospects. Even in these difficult times, the egames sector has turned in positive performance against broad equities…As a comparison, the S&P 500 is down 5.08 per cent year-to-date (as at 15 June 2020), while Tencent (the Chinese digital media company that has a large gaming business) has returned 13.39 per cent in the same period.”

Yeo says the launch is significant as the fund is the first games and esports ETF listed in Hong Kong or Asia. He expects interest in it from both retail and institutional investors.

Yeo told SportBusiness that Asia has been at the core of computer game industry growth in the last five years. Whilst growth in China has been well documented, he now sees significant growth potential in India and Southeast Asia.

“We also see specific opportunities in gaming companies that are able to adapt to the changing landscape of monetisation models from the traditional ‘pay to play’ to the free to play monetisation models,” Yeo said.

Those views are shared by DBS chief investment officer Hou Wey Fook, who recently told SportBusiness, “We believe Covid-19 will accelerate the growth of esports, especially in Asia-Pacific.”