CIO tells WP that many of us are e-gamers – even if we don't know it – and the sector's growth is undeniable
If you don’t fit the stereotypical spotty teenager description, its doubtful you view yourself as a gamer. But if you play a little Tetris (retro) or Among Us when you get some remote-working downtime, you very much fit into that category.
After discussing the general rise and prominence of thematic ETFs over the past 12 months, Johnson told WP that, as well as the likes of cloud computing, cyber security, electric vehicles and work-from-home tech, gaming has taken off during the pandemic.
A lockdown friendly activity, it’s seen a massive increase in the number of users, from youths to parents to seniors. Research has suggested there was a 75% increase in gamers last year and Johnson said that, if a third stick around after we return to “normal” post-pandemic, that’s an estimated 25% increase in the number of users.
He said: “That has all the spillover effects in terms of growth. If you increase the size of the denominator, and then add in the trend each year, you've just got this massive bump up in the total number. Especially these days, gaming is a very social thing.”
On top of the dedicated, hardcore gamers who spend hours every day in their basement, there are rafts of casual players with a few games on their phone, for example. He added: “This has been one of the stories we've been telling about gaming since we put the product together: how many people are gamers and maybe don't even think of themselves that way.
“In fact, the number of casual gamers or people who have a few games on their phone is a massive market, absolutely enormous and much bigger than the number of hardcore gamers.”
A $160 billion industry – the same size as the Canadian banking industry - is, therefore, set to get bigger. Johnson said this raises eyebrow among investors, who then look into gaming companies as a genuine option for their portfolio.
In a separate industry but also propelling the profile of thematic ETFs has, of course, been Tesla and its leader Elon Musk, who has overseen a mindboggling rise in stock value. Just like with tech stocks, however, Johnson stressed there is so much going on under the banner names right now – with electric vehicles no different.
NIO, for example, is known as the Tesla of China and produces electric vehicles where they swap out the battery at service stations; a feature that allows it to get around customers waiting 30 minutes to charge it up.
Johnson explained: “That means as the battery tech gets better, your car gets better. As they get better batteries, you get a better car. They've grown so quickly, the big question surrounding the company is, can they increase their factory capacity fast enough to meet demand?”
He added: “Tesla has got everybody's attention and Elon Musk is brilliant at everything he seems to do but they're not the only game in town, and investors are recognizing that”
Regardless of the world b eing in a pandemic of not, the CIO believes these trends are undeniable and have been accelerated by the health crisis. Investors are paying attention, which is gratifying for the likes of Evolve, which has put together thematic funds since its inception three years ago.
“It is obviously a terrible thing that we're going through in the world right now,” he said. “But anywhere we can identify a long-term trend with a short-term catalyst to increase the speed of [the trend], we love that and it has been one of guiding principles of how we invest. We’ve really seen that pay off in the past year.”