2 ETFs That Could Benefit From End-of-Year Spending

The last few days of December usually means fewer trading days on Wall Street. Meanwhile, billions of global citizens get ready to start the new year with renewed hopes and resolutions. And shopping and entertaining—both at home or outside—become an important part of our lives in the final stretch before we turn the page on the calendar.

Recent metrics suggest that US consumers will spend well more than $200 billion shopping this holiday season. About a fifth of sales will be online. Therefore, today we introduce two exchange-traded funds (ETFs) that might benefit from increased spending levels.

1. Invesco Dynamic Food & Beverage ETF

• Current Price: $44.13
• 52-Week Range: $35.33 - $44.53
• Dividend Yield: 0.93%
• Expense Ratio: 0.63% per year

According to numbers from the US Department of Agriculture:

“In 2020, the food service and food retailing industries supplied about $1.69 trillion worth of food…. [T]he share of food-at-home expenditures was 51.9%, and food away from home was 48.1%.”

This first fund could be of interest to readers who see continued growth in the US food industry in 2022. The Invesco Dynamic Food & Beverage ETF (NYSE:PBJ) invests in some of the largest food and beverage names in the country. They can be producers, manufacturers as well as distributors of packaged foods, agricultural produce and beverages. A few are also involved in developing new related technologies.

PBJ Weekly Chart.

PBJ, which has 32 holdings, began trading in June 2005. The top 10 names make up close to half of net assets of $109.9 million. In terms of sub-sectors, packaged food and meat companies account for 42.41% of the holdings, followed by soft drink companies (14.81%), agricultural product producers (11.15%) and food distributors (8.81%).

Leading names include manufacturers of branded consumer foods General Mills (NYSE:GIS) and Mondelez International (NASDAQ:MDLZ), global confectionery group Hershey (NYSE:HSY) and beverage giants Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP).

So far this year, PBJ is up 22.5%, and hit a record high in recent days. Forward P/E and P/B ratios stand at 15.83% and 2.38%, respectively. Despite the double-digit increase in price, we remain bullish on the segment. Interested readers could consider buying between $40 and $42.

2. Global X Video Games & Esports ETF

• Current Price: $28.46
• 52-Week Range: $26.91 - $37.23
• Dividend Yield: 0.80%
• Expense Ratio: 0.50% per year

Investors might be interested to know that “customers buy more entertainment online than anything else.” And when we mention entertainment, video gaming and e-sports are two segments that get significant attention.

The global gaming market is expected to reach almost $550 million by 2028, showing a compound annual growth rate (CAGR) of more than 13% between 2001-2028. Meanwhile, the global e-sports market is expected to exceed well over $7 billion by 2028.

The Global X Video Games & Esports ETF (NASDAQ:HERO) gives access to firms that publish video games, stream or distribute gaming or e-sports content, and operate competitive e-sports leagues. They could also be manufacturing hardware used in video games and e-sports.

HERO Weekly Chart.

HERO, which has 40 holdings, tracks Solactive Video Games & Esports Index. The fund started trading in October 2019.

The communication services sector holds the the biggest slice (83.7%) of the fund. Next in line are information technology (15.8%) and consumer discretionaries (0.5%). The top 10 names comprise about 57% of net assets of $444 million.

Among the top names are NVIDIA (NASDAQ:NVDA), Electronic Arts (NASDAQ:EA), NetEase (NASDAQ:NTES), Nintendo (OTC:NTDOY) and Sea Ltd (NYSE:SE).

Year-to-date, the fund is down 8.2%. HERO hit a record high in February. Since then, the fund has lost about 25% of its value. Interested readers could begin to find value around these levels.