NEW YORK: Music-loving investors may soon be able to bet on their favourite melodies as a new entertainment-focused exchange-traded fund (ETF) edges closer to reality.
Tidal ETF Trust is targeting the second quarter to launch the Clouty Tune ETF (ticker Tune), a passive fund that would offer exposure to a global portfolio of companies engaged in music, media and entertainment, according to a filing with the US Securities and Exchange Commission.
Tune would join a tiny class of music-adjacent funds, including the genre-specific US$3.2mil (RM13.6mil) KPOP and Korean Entertainment ETF.
“There is really no pure way to play the music industry, so this is a pretty unique fund,” said Athanasios Psarofagis, an analyst at Bloomberg Intelligence.
Still, “it’s too niche for institutions. When they look at thematics, they look at it from a bigger level, like technology or innovation.”
The fund would passively track the Clouty Tune index, a gauge administered by Solactive AG with 50 companies with stock price changes that typically align with digital music consumption patterns, according to the filing.
The timing of a potential launch comes with challenges.
Spotify Technology SA unveiled plans in January to cut about 6% of its workforce, or around 600 employees, due to diminished advertising revenue and a shaky economic outlook.
Walt Disney Co., meanwhile, announced targeted hiring freezes and job cuts in November.
Still, music as an asset class appears to be growing. A number of artists, from Justin Bieber to Stevie Nicks, have sold their catalogues, just as record companies dash to repackage copyrights as investment vehicles.
Private equity powerhouses Blackstone Inc and KKR and Co Inc. have been at the forefront of this effort to acquire chart-topping songs.
“Not everyone’s going to know how to price a catalogue. Not everyone’s going to know how to get a fractioned piece of every record,” David Umeh, chief executive officer and founder of Clouty, said in an interview.
“But an ETF that provides market exposure to that entire sector is a great way to capture the benefit of music itself because it’s been so resilient.” — Bloomberg