HERO
Global X Video Games & Esports ETF
Published by Radif Partners · Updated
Overview
Global X Video Games & Esports ETF (HERO) tracks the Solactive Video Games & Esports index and holds its constituents directly, a physical replication managed by Global X. Dividends are paid out to holders rather than reinvested, so HERO suits investors seeking regular income. The fund is domiciled in US, which determines the withholding tax treatment applied to its dividends. Annual charges come to 0.50% of assets, and the fund holds 62M under management. Over five years the fund returned -1.5% a year on average, against 15.4% over three years. It is not eligible for the French PEA, but can be held in a securities account, a UK ISA or a German Depot. Its risk level is rated high. Launched on 2019-10-25, the fund is denominated in USD and has 7 years of track record. Because HERO distributes, every payment is taxable in the year it is received, against the dividend allowance in a general account, while it stays sheltered inside an ISA or a SIPP. Domicile in US sets the withholding the fund itself suffers on the dividends it receives, a cost absent from the stated fee but present in the return.
Ongoing charges of 0.50% place this fund 29th of 44 comparable funds, whose median is 0.40%. On £10,000 that costs about 50 a year and 500 over ten years at a constant amount, deducted daily and never visible on a statement: it shows up in the gap between the fund's return and its index's. At this level, neither low enough to be an argument nor high enough to be an obstacle, the decision rests elsewhere: on the index tracked, on the distribution policy, and on what your broker charges to buy.
Replication is physical: the fund actually holds the constituents of Solactive Video Games & Esports, which makes its contents verifiable line by line in the issuer's report. Two points deserve attention. Securities lending first, practised by most physical funds to reduce costs: it earns a few hundredths of a point and creates an exposure to the borrower, covered by collateral, with the annual report stating the proportion lent. Rebalancing second: every change in the index's composition forces the fund to buy and sell, and those internal costs are not in the 0.50% headline. That is why two funds at the same price do not track their index with the same fidelity.
The fund is domiciled in the United States, and for a European investor that is the point to settle before any other. A US fund is outside UCITS regulation: most European brokers cannot offer it to a retail client for want of a key information document, so access depends on the investor's status. Two tax consequences follow as well: dividends paid to a non-resident bear US withholding, reduced by treaty where a W-8BEN is in place, and US securities held directly fall within US estate tax above a threshold that is low for a non-resident. An Irish-domiciled equivalent avoids both questions.
Income is distributed: the fund pays out the dividends it receives, usually one to four times a year. For a holder living off the portfolio that is what is wanted, since the income arrives without selling. For someone still accumulating it is a tax disadvantage in a taxable account: each payment is taxed in the year received, so the amount reinvested is reduced before it starts working again. Reinvesting by hand also costs a dealing commission each time and often leaves cash idle for want of the price of a whole unit. An accumulating class on the same index, where one exists, settles the question.
At 62 million in assets, this fund is small, and size is the main risk here, ahead of the index's volatility. A fund that stays below its issuer's viability threshold ends up merged or wound up, and both happen without your consent: liquidation forces a sale on a date you did not choose, hence a taxable gain at the wrong moment, and a merger moves you to an index that is not quite the one you picked. Assets falling year after year are the signal to watch, more than the absolute level. At this size the spread between buying and selling price is also wider, which costs on every order.
Solactive Video Games & Esports is a broad index, and that is the building block most portfolios have reason to own before any other, for a simple reason: it requires no forecast. Two points deserve checking before calling it diversified. Cap weighting concentrates the portfolio on the largest companies, so the top ten holdings can make up a substantial share, and that concentration grows without any rule changing. And the geographic scope matters: a developed-world index leaves out emerging markets, while a broad US index is not global exposure despite the international revenue of the companies it holds.
Over one year the fund shows -15.9% against -1.5% annualised over five years: the recent year lags the long average. Before drawing a conclusion, two possible causes have to be separated, because they have different consequences: a fall in the index tracked, which affects every fund replicating it, or a deterioration specific to the fund, which shows in the tracking difference rather than in the return.
0.50%
62M
62M USDHigh
77
Physical
Distributing
USD
US
Solactive Video Games & Esports
Global X
2019-10-25 (7 years)
Contextual Analysis
Fund Size
With 62M in assets, this is a small fund, watch out for spreads and closure risk.
Fee Positioning
A TER of 0.50% is above the market average (~0.35%), justified if the strategy is specialized.
Track Record
Launched in 2019-10-25, this fund has 7 years of history, enough to evaluate consistency.
Risk Profile
High risk, suited for long-term investors comfortable with volatility.
Performance
Returns Summary
| Period | Ann. Return | Cumulative |
|---|---|---|
| 1 Month (est.) | – | -1.4% |
| 3 Months (est.) | – | -4.2% |
| 6 Months (est.) | – | -8.3% |
| YTD (est.) | – | -6.9% |
| 1 Year | -15.9% | -15.9% |
| 3 Years | +15.4% | +53.6% |
| 5 Years | -1.5% | -7.1% |
| Since inception (7y) | -0.6% | -4.4% |
Key Facts
Fund Profile
Themes & Zones
Holdings
Risk
How to Buy This ETF
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About this ETF
The Global X Video Games & Esports ETF tracks the Solactive Video Games & Esports index. It is managed by Global X using physical replication and follows a distributing distribution policy. The fund is denominated in USD and domiciled in US. It has a total expense ratio (TER) of 0.50%.
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Frequently asked questions
What do HERO's 0.50% charges actually cost?
They are taken from the fund's value continuously and never billed separately: on £1,000 invested that is about £5.00 a year and roughly £50 over ten years at a constant amount. That is the only cost of the fund itself. Your broker's commission and the spread between buying and selling price come on top, and they weigh most on small frequent purchases.
What should you re-check on HERO once a year?
Three things, none of which depends on the market. The ongoing charge, which an issuer revises without notice and whose gap to a competitor can invert. The tracking difference, the only figure that says whether replication stays faithful. And the methodology of Solactive Video Games & Esports, which can change its selection or weighting rules without the fund's name moving: in that case what you hold has changed with nothing to announce it.
Does HERO lend out the securities it holds?
Probably in part: most physical funds lend securities to reduce their costs, and Global X publishes the proportion in the annual report. Lending income is worth a few hundredths of a point, shared between the fund and the issuer. The risk is the borrower's, covered by collateral worth more than the amount lent, and it appears in the prospectus rather than in the stated fee.
Can a European investor buy HERO?
Not always. This fund sits outside the UCITS framework, so most European brokers cannot offer it to a retail client for want of a key information document in their language. Two consequences follow: US withholding tax on dividends, reduced by treaty where a W-8BEN is filed, and US securities falling within US estate tax above a threshold that is low for a non-resident.
Does HERO pay dividends?
Yes: the fund distributes and pays out the dividends it receives, on a calendar set by Global X. The payment is taxable in the year you receive it in most accounts, even if reinvested at once, and reinvesting by hand costs a commission each time. An accumulating class on the same index avoids that friction for anyone who does not need the income.
This ranking is for informational purposes only and does not constitute a recommendation to buy or sell any security. Displayed performance is simulated.