GameStop surge leaves U.S.-based mutual funds and ETFs behind

FILE PHOTO: GameStop gift cards are shown for sale at a GameStop Inc. store in Encinitas, California
FILE PHOTO: GameStop gift cards are shown for sale at a GameStop Inc. store in Encinitas, California, U.S., May 24, 2017. REUTERS/Mike Blake

January 28, 2021

By David Randall

NEW YORK (Reuters) – A handful of exchange-traded funds appear to be among the largest institutional winners from the more than 360% rally in shares of GameStop Corp so far this week as the video game retailer remains at the center of a showdown between retail investors and short-selling hedge funds.

The $189 million Wedbush ETFMG Video Game Tech ETF jumped more than 16.1% Wednesday, pushing it up approximately 25% since the start of the week. The $758 million SPDR S&P Retail ETF soared 12%, powering it to a 21.9% gain for the week-to-date.

The relatively small number of winners among funds from the outsized rally in GameStop reflects the company’s relatively small ownership base among mutual funds, leaving the prime vehicle for Americans’ retirement savings mostly unaffected by GameStop’s rally.

Overall, just 367 mutual funds had a long position in GameStop as of their most recent reporting period, according to Lipper data, while 2,151 funds reported a long position in competitor Best Buy Co Inc. Apple Inc, one of the most widely held stocks on Wall Street, is owned by 5,641 mutual funds.

The small mutual fund ownership base is one reason why GameStop shares notched one of the most high-profile surges in Wall Street memory, analysts said. [L1N2K221Y]

“If there’s a large institutional investor base held within mutual funds the stock is likely to be less volatile as these are often core long-term positions. Stocks that are held more by retail investors could see hot money move in or out relatively quickly,” said Todd Rosenbluth, director of mutual fund research at CFRA.

Few large funds that own shares in GameStop have a big enough position in the company to sway their overall performance.

The Fidelity Intrinsic Opportunities fund, for instance, owns 9.75% of GameStop’s outstanding shares, according to Lipper data. Yet that position accounts for just 0.64% of the fund’s assets. The fund is up 5.6% for the year-to-date, approximately 1.5 percentage points less than the benchmark Russell 2000 index.

The BlackRock Advantage Small Cap Core fund holds 0.03% of its assets in GameStop, according to Lipper.

Overall, BlackRock, the world’s largest asset manager, owned about 9.2 million shares in GameStop as of Dec. 31, 2020, spread over several funds. If BlackRock has not since sold any of those shares, its stake’s value is up $2.4 billion since the start of the year.

(Reporting by David Randall; editing by Megan Davies and Leslie Adler)