A new exchange traded fund has hit the field, tackling companies that sponsor and partner with some of the biggest names in sports industry.
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SportsETFs is the latest issuer to enter the ETF arena, launching the ProSports Sponsors ETF (BATS: FANZ).
The ProSports Sponsors ETF tries to reflect the performance of the ProSports Sponsors Index, which is comprised of companies which are official sponsors of the major professional football, baseball, hockey and basketball leagues in the United States, along with national sports broadcasters with rights agreements with such leagues, according to a prospectus sheet.
The underlying index components may include both U.S. and foreign companies, along with those located in emerging market countries. Holdings are also equally weighted when added to the index and when the index is rebalanced.
“We believe that our research has demonstrated that investing in companies that partner with sports leagues in the United States represents a compelling investment opportunity because businesses believe they can increase brand awareness, grow revenues and market share through their attachment to sports,” according to SportsETFs. “Over time, we believe that the companies that invest in pro sports partnerships grow faster than the broader economy. Research also shows that these partnerships have an influence on the purchasing decisions of fans who follow their favorite sports.”
The new ETF will try to take advanatge of the growth potential of these companies partnered with major sports leagues and encompass market exposure in several sectors, including consumer discretionary, information technology, financials, energy and health care.
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FANZ may also be seen as a type of value play as the large-cap components invovled in these sports deals typically have enough free cash flow to afford a league sponsorship or broadcasting rights. According to PwC’s Sports Outlook, in North American sports, the media rights alone are expected to increase by 5.5% to $21.3 billion through 2020 and sports sponsorship are anticipated to rise 3.9% to $18.7 billion on a compound annual growth rate.
“Following the investment strategy of the famed portfolio manager Peter Lynch, who said, ‘invest in what you know,’ sports fans now have the opportunity to invest in a diversified portfolio of brands that they recognize in one fund. Our research demonstrates that the typical avid sports fan is a financially responsible individual that has disposable income to spend on sports merchandise, tickets, and TV packages. FANZ seeks to provide them with access to capture the growth opportunities presented by these companies,” Jim Kozimor, co-founder and chief strategy officer of SportsETFs and announcer with the NBC Sports Group, said in a note.
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