Tune Into the Launch of the First Music ETF
Zacks talks about where a music-oriented ETF may fit in investors' portfolios.
Below is an excerpt from an article written by Sweta Killa and published on Zacks on 7/13/2023.
MUSQ launched its first-ever ETF named MUSQ Global Music Industry ETF (NYSE: MUSQ) early this week. The fund offers a unique “pure play” exposure to the $26.6 billion global music industry. This is a pioneering move that promises to reshape the economic landscape of the music industry. This novel financial instrument offers investors a unique opportunity to tap into the music industry's financial rhythm, marking a significant evolution in the perception and approach toward music-related investments.
MUSQ in Focus
The new ETF aims to offer investors a way to align their portfolios with the entire music industry ecosystem, including streaming services (34.2%), content and distribution (35.3%), live events and ticketing (9.47%), satellite and broadcast radio (7%), as well as music equipment and technology (13.17%). It tracks the MUSQ Global Music Industry Index and holds 48 stocks in its basket.
MUSQ is skewed toward the top three firms – Amazon (AMZN), Apple (AAPL), and Alphabet (GOOGL) – with more than 7% share each. Other firms do not hold more than 3.6% of the total portfolio. Some of the other music names include Universal Music, Warner Music, Live Nation, Spotify, Sony Music, Hybe, and SM Entertainment.
How Will it Fit in a Portfolio?
The ETF could be an intriguing choice for investors seeking exposure to the fast-growing music industry, which has come a long way since the days of the phonograph in 1877. It could be an attractive way to tap global growth opportunities with the development of new monetization methods, rising global paid streaming penetration, as well as the resurgence of live music events post-pandemic.
The global music industry has technologically transformed over the years from reel-to-reel, 8-tracks, cassettes, and CDs, to the digital age. There has been a drastic change in the way individuals consume music, both live and recorded. Currently, the music industry is experiencing a renaissance fueled by the advent of digitization, AI, social media and streaming platforms.
The global music industry witnessed record revenues of $26.2 billion in 2022, representing a 9% increase over 2021. According to the ETF issuer, the global music market is expected to grow at a compound annual rate of 11.8% from 2022-2026. Global paid streaming penetration is expected to double by 2030 while paid streaming revenues are projected to witness a 10% CAGR through 2030. Music publishing revenues are expected to witness a 6% CAGR to reach $11.7 billion by 2030. Goldman Sachs predicts the global music industry to rise at a compound annual rate of 12% to reach $53.2 billion by 2030, according to data cited in the product’s white paper.
For a complete 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.