A video game ETF? Save your quarters

By Barry Randall

In early March, PureFunds, the ETF sponsor that in late 2014 brought you the "Cyber Security" exchange-traded fund (ETF) (HACK) released another on-trend financial product.

This time, PureFunds is hoping you'll 'play' the video game space with its "Video Game Tech" ETF (GAMR) .

I've been covering the video game industry for about 20 years, first as a buy-side analyst and then as a portfolio manager focusing on technology stocks.

My first reaction to learning about the GAMR ETF is…what took you so long? The cynic in me figured that this product was long overdue. But that doesn't mean buying it is a good idea.

 

Video-game-ETF

 

Expensive

First, the GAMR ETF sports a steep 0.75% expense ratio , a level that verges on mutual fund territory. By comparison, the expense ratio for the popular S&P 500 SPDR ETF (SPY) is only 0.09%.

Yet 50% of the GAMR ETF’s net assets are in just nine stocks so you could easily re-create much of GAMR in your own portfolio and would likely do so more cheaply, depending on how much you pay to trade.

 

Volatile

What's more, the GAMR ETF isn’t exactly massively multi-player: There are only 36 separate stocks in the whole fund. This will make the product inherently more volatile than other, broader ETFs like the SPY or the QQQ .

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