Meet MUSQ, the Latest Music Fund to Tap Into ETF Craze

Billboard describes how the MUSQ ETF may provide investors with exposure to segments of the music industry to which they may have limited access otherwise.

Below is an excerpt from an article written by Glenn Peoples and appeared in Billboard on 6/28/2023.

A third music-focused electronic-traded fund — or ETF — is set to debut on the New York Stock Exchange on Friday (June 30). The aptly named MUSQ Global Music Industry ETF, trading under the ticker MUSQ, has 48 stocks representative of the modern music business, including Universal Music Group, Spotify, and Live Nation.

To MUSQ’s founder, David Schulhof, the fast-growing ETF market is primed for an index that allows investors to easily buy into the global music business’s growth story.

“It’s been hard to invest in music for the last 25 years,” he says. “You had to be a limited partner at KKR or Blackstone or Apollo. And it was really hard to get liquidity.”

Schulhof, most recently the president of music publishing at LiveOne, invested in music assets as the co-founder and CEO of Evergreen Copyrights, which was acquired by BMG Rights Management in 2010, but everyday investors weren’t able to participate in music’s growing popularity as an asset class. “There were a lot of other private equity-backed companies, but it was hard for investors to get exposure” to music, he says.

With MUSQ, Schulhof says he’s giving “the Robinhood investor” a liquid investment to participate in the music business. MUSQ has 48 companies spanning the music content and distribution (including Warner Music Group, Believe), digital music (Spotify, Tencent Music Entertainment), live music and ticketing (Live Nation, Madison Square Garden, Vivid Seats), satellite and broadcast radio (iHeartMedia, SiriusXM, Townsquare Media) and music equipment and technology (Dolby, Sonos). U.S.-based stocks account for 45% of the index’s value; the remaining 55% coming primarily from South Korea, Japan and China.

MUSQ avoids video streaming and other digital entertainment stocks that may rise and fall with music but aren’t dedicated to music. Still, not all of the fund’s companies generate most or all of their value from music. MUSQ’s three largest companies are Apple, Amazon and Alphabet. The next-largest company by weight, Sony Group Corp., owns film, gaming, and electronics divisions in addition to Sony Music Entertainment. According to the index’s criteria, a company can be considered for inclusion if it derives at least 50% of its annual revenues from the global music business, is a top-five company, or have at least 10% of the global market share in one of the five segments of the music business the index covers.

“I had to include them,” says Schulhof, “and I couldn’t ignore them. But I created, I think, a fair, balanced approach, which was to cap their market share on the index at 7%.”

To be eligible for the index, a company must have a minimum market capitalization or assets under management of $100 million and a minimum average daily trading volume of $200,000 over the previous six months. Some small companies, such as music streamers Deezer and Anghami, and the newly public Alliance Entertainment, didn’t make the cut. But many other small, unheralded companies are among the index’s 48 stocks, including Stingray, a Canadian streaming company that services cable television networks, and Cliq Digital, a German provider of streaming services that bundle music, movies, audiobooks and other content.

PwC believes ETFs will grow to $20 trillion by 2026.

“I have to believe that some amount of that money is going to be interested in music,” says Schulhof.

For a complete list of MUSQ holdings, please click here. Holdings subject to change.