New Sports Betting ETF Sees Huge Volume

June 10, 2020

Turns out, a pandemic is the perfect time to launch a sports betting ETF.

The Roundhill Sports Betting & iGaming ETF (BETZ) has seen enormous trading volume since its launch last Thursday. On its first day of trading alone, BETZ saw more than $17 million in shares traded, while on its second day, $50 million worth of shares exchanged hands:

BETZ's Incredible Launch Volume
Date Trading Volume In Shares (M) Trading Volume In Dollars (M) AUM (M)
6/4/2020 1.057 $17.30 $1.60
6/5/2020 2.949 $50.13 $1.60
6/8/2020 2.717 $46.13 $16.20

Sources: ETF.com, Bloomberg

As of midday Tuesday, June 9, BETZ had already seen 1.14 million shares traded, roughly equivalent to $19 million in volume.

BETZ Volume Highly Unusual

Most ETFs are lucky to see even a few hundred thousand shares trade in their opening weeks, so BETZ's supersized debut is highly unusual, especially for a boutique issuer with only one other ETF in its lineup: the $18 million Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD). (Read: "Pandemic Lifts Video Game ETFs")

"Even in our wildest dreams, we didn't envision five-odd million shares over three days trading," said Tim Maloney, co-founder and CIO of Roundhill Investments.

So far, BETZ's assets under management (AUM) have grown to $16 million, or just under the amount traded on the fund's first day of trading.

Actual assets in the fund may be much higher. There can be some lag between when new creation units are made and when new investment assets are reported for a given ETF. It's likely that, given the significant activity witnessed in the fund, BETZ's AUM should rise precipitously over the next few days.

BETZ has an expense ratio of 0.75%.

Robinhood Traders Place Bets On BETZ

Maloney points to three reasons for BETZ's massive volume: more investors staying at home due to the pandemic, and spending more time tracking the markets; increasing legalization of sports betting around the country; and the rise of the so-called Robinhood trader, a reference to the Robinhood online investment platform that offers commission-free trading of stocks and ETFs.

"We create products that really make sense to a retail-skewed demographic, and we want to empower them to invest what they know," he said, adding that their thematic ETFs don't always fit into a traditional institutional asset allocation model.

Retail investors are "a demographic that is taking a more active stake in their investments now and looking for themes that make sense to them," Maloney added. "That audience maybe wasn't there five years ago. But it is there today."

Inside BETZ's Portfolio

Like NERD, BETZ is a tiered-weighted ETF that splits its global investment universe into three categories. "Pure play" companies are those for whom sports betting and iGaming (that is, internet gambling) is a primary business model; "core" companies have substantial operations in sports betting and iGaming; and "noncore" companies have some, but not a majority, tied to the sports betting sector.

BETZ is a relatively targeted fund, with 30 stocks in its portfolio. Currently, its two largest holdings are sports betting stocks DraftKings (DKNG) and Flutter Entertainment, the parent company of FanDuel, at 6% of the portfolio each. Gan Ltd, a British software-as-a-service supplier of internet gambling software, comprises another 5% of the portfolio.

(Use our stock finder tool to find an ETF’s allocation to a certain stock.)

Contact Lara Crigger at [email protected]

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