On a global basis and here in the U.S., the sports business is big business. Consider this: Four NFL teams are worth at least $4 billion and each of the league's 32 franchises – even those with poor on the field products – are worth at least $2 billion.
Several Major League Baseball (MLB) and NBA franchises as well as some high-level European soccer clubs are also in the multi-billion stratosphere. Add to that, some sports teams are publicly traded entities, underscoring the credibility of this investment thesis. That accessibility is getting an assist courtesy of a new exchange traded fund: The Roundhill MVP ETF (NYSEARCA:MVP).
Like some other new ETFs, MVP expands upon and refreshes an old idea languished. Several years ago, an ETF by the ticker “FANZ” focusing on companies with deep sports sponsorships came to market, but struggled to gain traction and was ultimately shuttered. That doesn't mean the same fate will befall MVP. After all, the VanEck Vectors Social Sentiment ETF (NYSEARCA:BUZZ), itself a replay of an old concept, is just two weeks old and already has more than $421.4 million in assets under management.
Adding to the viability of case for MVP is that it's not an exact replica of the deceased FANZ, the universe of investable sports concepts is larger today and investors, particularly those in younger demographics are warm to the idea of allocating some capital to sports-related concepts.
MVP “consists of companies from across the globe who are actively involved in the business of sports. This classification includes (i) professional sports teams and franchises (ii) professional sports leagues (iii) sports media and apparel companies,” according to Roundhill.
A consideration advisors and clients should note when evaluating MVP is that the rookie ETF is not a sports betting ETF nor is it intimately levered to that growing theme. Roundhill addresses that concept with the wildly successful Roundhill Sports Betting & iGaming ETF (NYSARCA:BETZ).
“MVP holdings consist of professional sports teams (New York Knicks, New York Rangers,Atlanta Braves, Manchester United, Juventus, Borussia Dortmund, AS Roma), professional sports leagues(Formula One and WWE), and companies within the sports media and sports apparel sectors (Nike, Puma, Adidas, and MSG Networks),” according to the issuer.
Allocations like those are potentially useful on multiple fronts. First, MVP's roster steers clear of the failed sports sponsors ETF concept. Second, the new fund offers allocations to brands – in some cases in larger size than is found in pure beta ETFs – that clients are already familiar with. Third, some clients don't want exposure to gambling stocks and MVP avoids that, too. Finally, MVP features some exposure to pre-deal special purpose acquisition companies (SPACs), meaning there's potential upside for the fund as those components find merger partners.
Bottom Lining MVP Portfolio Merit
Owing to the fact that MVP debuted on March 17, it will take some time for the fund to start appearing on various professional brokerage platforms that advisors use.
However, given the success of the aforementioned BETZ and other nifty Roundhill ETFs coupled with Americans' ongoing enthusiasm for sports, it's reasonable to surmise advisors may field some questions about the new ETF over the near-term.
Indeed, MVP is a thematic ETF, but these days, that's more advantage than strike against it. Additionally, the new fund could be appropriate for younger clients seeking growthier exposure to the consumer discretionary sector beyond mega-cap fare such as Amazon.
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