Music Is Hot, Global, and Investible. Now There's an ETF That Wants to Make It Accessible.
Barron's highlights how investors may gain exposure to what it considers a hot investment opportunity.
Below is an excerpt from an article written by Avi Salzman and published in Barron's on 7/14/2023.
Taylor Swift’s tour is shattering records and streamer Spotify Technology’s stock is up 100% this year. And there are suddenly new ways to invest in music, such as David Schulhof’s recently launched MUSQ Global Music Industry exchange-traded fund, which made its debut July 7.
Music labels such as Warner Music Group and Universal Music Group that dominated the industry for decades have gone public in recent years; so have producers of fast-growing K-pop. Music-industry veteran Schulhof’s MUSQ invests in a range of companies—streamers such as Spotify, equipment makers like Sonos, and event companies like Live Nation Entertainment. About half of MUSQ’s assets are in non-U.S. names, with 17% from South Korea.
Schulhof worked with EQM Indexes to build the ETF, then licensed it to Exchange Traded Concepts to get it on the New York Stock Exchange. He sees music as a liquid alternative not correlated to the larger economy.
Goldman Sachs recently predicted that the music industry would grow by 7.3% a year through 2030 as music streaming prices rise and companies figure out how to get superfans to spend more. The ETF calls itself a music pure-play, but it also includes a trio that makes most of their revenue outside music — Amazon.com, Apple, and Alphabet.
Because MUSQ is market-cap weighted, those stocks make up more than 20% of the ETF. But they can’t go much higher: Each stock’s weighting is capped at 7% when it’s time for quarterly rebalancings, making room for Taylor Swift, if she ever decides to truly go public.
For a full list of MUSQ holdings, please click here. Holdings subject to change.
MUSQ Global Music Industry Index ETF is offered by prospectus. Carefully consider the investment objectives, risks, charges, and expenses. This and other important information can be found in the MUSQ ETF prospectus, which should be read carefully before investing and can be obtained by visiting https://musqetf.com or by calling 1-855- MUSQ-ETF(687-7383).
Risk Disclosures
There is no guarantee the Fund will achieve its stated objectives.
In addition to the normal risks associated with investing, international investments may involve the risk of capital loss from unfavorable fluctuation in currency values, differences in generally accepted accounting principles or social, economic or political instability in other nations.
Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume.
In addition to the normal risks associated with investing, investments in small- or mid-capitalization companies typically exhibit higher volatility.
The Fund’s concentration in an industry or sector can increase the impact of, and potential losses associated with, the risks from investing in those industries/sectors.
The Fund is non-diversified.
The Fund is new and has a limited operating history for investors to evaluate. A new and smaller fund may not attract sufficient assets to achieve investment and trading efficiencies.
The Fund may invest in securities denominated in foreign currencies. Because the Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if currencies of the underlying securities depreciate against the U.S. dollar or if there are delays or limits on repatriation of such currencies. Currency exchange rates can be very volatile and can change quickly and unpredictably.
All investing involves risk, and asset allocation and diversification do not guarantee a profit or protection against a loss. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, might be worth more or less than their original cost. ETFs are subject to risks similar to those of stocks, as well as other risks specific to the particular ETF.
ETF shares are traded on exchanges, and are traded and priced throughout the trading day. ETFs permit an investor to purchase a selling interest in a portfolio of stocks throughout the trading day. Because ETFs trade on an exchange, ETF shares are bought and sold at market price (not NAV). The prices of ETFs may sometimes vary significantly from the NAVs of a ETFs’ underlying securities. Brokerage commissions will reduce returns.
Exchange Traded Concepts, LLC serves as the investment advisor. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Exchange Traded Concepts, LLC or any of its affiliates.