A new ETF that launched today seeks to target companies that sponsor and partner with sports teams. The ProSports Sponsors ETF (FANZ) invests in companies that are official sponsors for the largest professional sports leagues in the U.S.—football, baseball, hockey and basketball—or that are national sports broadcasters that negotiate rights agreements with those same leagues.
FANZ comes with an expense ratio of 0.69% and lists on the Bats exchange. Bats is owned by CBOE, the parent company of ETF.com.
“The reason these companies want to be a part of the professional sports leagues is because of the audience they bring. It’s a loyal audience. It’s an active audience. It’s a smart audience. But it’s consistently coming back for more and more,” said Jim Kozimor, co-founder and chief strategy officer of SportsETFs, the firm behind FANZ. Kozimor is also an announcer with the NBC Sports Group.
“We realized that the leagues have been growing much faster than the overall economy, through the recession, through the recent uptick and since about 2005,” he added.
The fund’s underlying index is equal-weighted and currently includes 66 components. The securities included must be either U.S. common stocks or American depositary receipts (ADRs) with at least $1 billion in market capitalization. Components must also meet minimum liquidity requirements.
According to Nick Fullerton, SportsETFs’ president and co-founder, the index includes mainly large-cap companies. It tilts heavily toward consumer nondiscretionary and discretionary stocks, which comprise about half of the index. There are also notable weightings to technology, energy and financials. Although the index is 85% domestic, through ADRs and Canadian companies listed in the U.S., it offers some exposure to non-U.S. developed markets.
Interestingly, the three publicly traded U.S. professional sports teams—the Cleveland Indians, the Boston Celtics and the Florida Panthers—are not included in the index because they do not constitute partners and do not really fit with the spirit of the index given their regional focus.
“We’re looking for league-wide growth,” Fullerton said.