The exchange-traded fund contains 50 stocks spanning music and entertainment, including Universal Music, Warner Music, Spotify and Disney.
ETFs will experience a 17% compound annual growth rate and surpass $20 trillion in assets under management by 2026.Like individual stocks, ETFs trade on a stock exchange and change in value according to demand. But unlike an individual stock, an ETF is diversified and carries less risk. What’s more, ETFs often around a particular theme, such as ESG — environmental, social and corporate governance — precious metals, solar power technology and cannabis.
Aside from strictly music companies, TUNE also includes Netflix, Paramount, The Walt Disney Company, Adobe, Fox Corporation and LG. “The investment strategy was to invest in the rails — the companies that leverage media and entertainment to get in front of people,” explains Umeh. The remaining 20% of the index is constructed by identifying companies traded on U.S. exchanges whose securities’ price changes “typically align with digital music consumption patterns,” according to the prospectus. Those aren’t necessarily entertainment companies, according to Umeh, but could be a health care or data company whose stocks show a historical correlation with the returns in digital music. The fund charges a management fee equal to 0.65% of the investment value annually.
TUNE is the second ETF that allows investors to own a variety of music and other entertainment companies. Last year, South Korea’s CT Investments launched KPOP, an ETF that allows American investors to buy into Korean entertainment companies such as HYBE and SM Entertainment that trade on South Korea’s stock exchange. Umeh is surprised there aren’t more ETFs like TUNE given the connection people have to music and music’s established track record in recent years.
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