The broad stock market looks like a total minefield right now. Big indexes like the S&P 500 ($SPX) are sitting at historically expensive prices, and they are relying almost entirely on a few massive AI stocks to keep from falling.
However, when the main market starts to finally crack, certain specialized niches can actually hold up well on their own. By looking outside of the usual tech stocks, three specific funds — the Roundhill Sports Betting & iGaming ETF (BETZ), the VanEck Video Gaming and eSports ETF (ESPO), and the Pacer Industrial Real Estate ETF (INDS) — have a real chance to perform well even in an awful market.
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Here are the three of them. They are all up in the past month, which is a good start. And they are very much under the radar, even if some of their holdings are well known.
Increasingly, I’m looking for ETFs and stocks that are not a big part of the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ ETF (QQQ), the index ETFs that have so much money chasing them. This popularity and surge in forced liquidity has made the SPY and QQQ historically risky..
Now, I’ll describe the three funds I picked out of the ETF crowd then chart them, so you can hopefully see what I see in terms of potential.
BETZ
The Roundhill Sports Betting & iGaming ETF (BETZ) focuses on online gambling and sportsbooks. This business is all about entertainment and doesn’t care about corporate tech trends. The fund holds a small, focused group of online betting companies like DraftKings (DKNG) and Flutter Entertainment (FLUT).
Instead of needing a booming economy to grow, these companies win as more states and countries legalize online gambling. Plus, huge global sports events keep drawing in new users automatically. Because betting is a habit that people rarely give up during tough times, these companies can keep growing their revenues even if big tech companies see their budgets cut.
ESPO
The VanEck Video Gaming and eSports ETF (ESPO) tracks the digital video game industry. This fund owns more than 25 of the biggest game publishers and console makers in the world, including names like Nintendo (NTDOY), Tencent (TCEHY), and Electronic Arts (EA). No single stock is allowed to make up more than 8% of the fund, which keeps it safe from one bad company ruining the whole portfolio.
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