So far this summer, we’re seeing a steady uptick in travel trends compared with 2020.
The U.S. Travel Association has predicted a 22.5% surge in travel spending compared with last year – and on top of that, a 15.7% jump predicted in 2022 as the “staycations” of the COVID-19 pandemic give way to higher vaccination rates and the return of travel planning.
One specific industry that was hard hit by the pandemic were casinos, with Vegas icon Wynn Resorts (ticker: WYNN) crashing from its pre-pandemic high of about $140 a share to a low of roughly $60 last year. Things are looking up once more for stocks like WYNN and its peers, however, so if you want to play this specific corner of the consumer discretionary sector then consider a bet on one these five gaming, gambling and casino exchange-traded funds:
Roundhill Sports Betting & iGaming ETF (BETZ)
One of the largest ETFs dedicated to gambling out there, this fund from smaller asset manager Roundhill Investments commands about $438 million in assets and holds 40 leaders in both in-person casinos and online gambling platforms.
These include overseas companies like Entain, a U.K.-based operator of European sportsbooks and online poker portals, as well as domestic stocks like Penn National Gaming (PENN) that offers racetracks and casinos across the U.S. If you want a direct play on the return of casino traffic and the rise of online gambling, this is one of the more established ways to do so without picking individual stocks.
BETZ comes with an annual expense ratio of 0.75%, or $75 for every $10,000 invested.
VanEck Vectors Gaming ETF (BJK)
Slightly smaller with only about $150 million in assets is BJK, but it’s also slightly cheaper at 0.65% in annual expense.
The makeup is similar at 40 stocks again, while the weightings toward the top of the list are a bit more pronounced with Sweden-based casino equipment manufacturer Evolution AB and Irish sports betting operator Flutter Entertainment (PDYPY) representing more than 15% of the entire portfolio at present.
This overemphasis on a few names hasn’t paid off in 2021, as it has only put up about 14% gains year to date versus about 17% for BETZ. That said, the fund’s performance slightly outpaces the roughly 13% gains for the S&P 500 over the same period.
Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD)
An even more niche fund from Roundhill is NERD, which cuts out the physical gambling stocks and focuses on esports and online gambling opportunities.
You’ll admittedly find companies more associated with video gaming than casino gaming, such as studio Activision Blizzard (ATVI), as well as hardware companies like Corsair Gaming (CRSR) that are more true tech companies than casino stocks making up a large swath of the “digital entertainment” portion of this ETF.
Given the rise of online sportsbooks, esports competitions and other electronic entertainment alternatives, investors may be OK with that additional exposure. And considering NERD has soared roughly 50% in the last 12 months, if anything, those other stocks are helping to power outperformance and not holding this gaming fund back.
Invesco DWA Consumer Cyclicals Momentum ETF (PEZ)
Though not a direct play on casinos and gambling alone, this $115 million consumer-oriented ETF is a great way to gain broad exposure to an increase in spending and tourism and take a stake in some top gambling stocks in the process.
In fact, the top single position at present is Las Vegas icon Caesars Entertainment (CZR), and online sports betting provider DraftKings (DKNG) is among the fund’s top 10 holdings as well. You’ll also get exposure to other cyclical names, however, including trendy shoemaker Crocs (CROX) and video game “barcade” operator Dave & Buster’s Entertainment (PLAY), too.
PEZ has jumped by nearly 20% since the beginning of the year, and it comes with an expense ratio of 0.6%.
iShares MSCI Hong Kong ETF (EWH)
Perhaps the most indirect play on casino stocks, this Hong Kong ETF isn’t the most obvious way to get exposure to gambling and a rise of consumer spending in the wake of the COVID-19 pandemic.
However, international investors will be very familiar with the growth potential of Macau, a special resort town in China located just 40 miles off the coast of Hong Kong that has been dubbed by some as the Las Vegas of the region. This is by far the most liquid fund on the list with about $1.1 billion in total assets, and it’s very affordable at just 0.51% in annual fees.
EWH also has direct casino plays among its top holdings, including regional gaming giant Galaxy Entertainment Group. That said, investors get more than just gambling companies here and you’re taking on some significant geographic exposure to Asia. The fund’s year-to-date performance is roughly on par with the typical S&P 500 ETF, however, so investors may want to give this fund a good look if they are more interested in the global gaming scene.