Ask the Manager: David Schulhof on Why Music Belongs in Your Portfolio

Welcome to Ask the Manager, ETF Central's series where we sit down with top experts, analysts and portfolio managers to dive into the latest investment trends, market updates, and economic insights.

We recently chatted with David Schulhof, Founder & CEO of MUSQ Global Music Industry ETF, about how his extensive experience in the music business led to the creation of the first ETF dedicated to the global music ecosystem.

Can you tell us how your deep background in music has prepared you to successfully launch and operate MUSQ?

From the moment I graduated from Georgetown, I started working in the music industry. My first job was working at Interscope Records in Los Angeles.

I had a chance to work with artists like Tupac Shakur, Snoop Dogg, Dr Dre, No Doubt and many others. I later worked at Disney for 7 years overseeing music for Miramax and Dimension Films.

I subsequently started my first music publishing company Evergreen Copyrights, which consolidated 26 music publishing companies and which I sold to KKR and which later became BMG Rights Management.

Most recently, I was President of Music Publishing at Live One, a public company that owns Slacker Radio and Podcast One. Over my career I have been an investor, owner, operator and executive across many segments of the music industry including record labels, music publishing companies, distribution companies, streaming services, and live music and ticketing businesses.

I decided after investing and working alongside many of these public companies that there should exist a convenient and portable way to invest in all of them. And through that process of examination, MUSQ was created and launched. 

Why did you pick the music industry as a theme to launch an ETF?

The music industry has become an attractive industry for investors to gain exposure in.

According to the recent Goldman Sachs report, Music in the Air, the Global Music industry is expected to more than double to about $171 billion by 2030. The industry’s growth is attributable to the rise of paid streaming services (Spotify, Apple), the growth of Content and Distribution companies (Universal, Warner Music), and live music performances are shattering pre-pandemic levels and are expected to continue growing (Live Nation).

Thematic ETFs like MUSQ have become popular over the last several years as other thematic ETFs have come to market. Some recent examples include CHAT (Generative AI), METV (Metaverse), BETZ (Sports Betting), WEED (Cannabis), NERD (Video Games), JETS (Airplanes), and CRUZ (Cruise Ships and Hospitality).

What are the MUSQ fund eligibility requirements and what are its market segments?

To be eligible in the MUSQ fund, all Companies must be principally engage (“Pure-Play”) or significantly engaged (“Diversified”) in one of the following sub-segments

• Music streaming
• Music content and distribution
• Live music events/ticketing
• Music equipment and technology.

Companies must have a minimum market capitalization of at least 100 million USD with average daily trading volume of at least $500,000 USD over the last six months. Companies are weighted according to their USD market capitalization, up to a maximum initial weight of 12% at the time of adjustment.

The index is rebalanced quarterly. 

Approximately 45% of the companies in MUSQ are domestic (US), and 55% are foreign (South Korea, Japan, China, Sweden, German, Australia etc). Of these segments, 35% of the companies are streaming, 35% are content and distribution, 11% are Music Equipment/Technology, 10% are Live Music / Ticketing, and 9% are Satellite/Broadcast Radio.

What are the some of the Fund’s top holdings?

Top holdings in the fund include Spotify, Universal Music, Live Nation, Ten Cent Music, CTS Eventim, Yamaha, Warner Music, HYBE, Apple, Google, Amazon, Madison Square Garden, Sonos, Net Ease, JYP Entertainment, Roland Corp., Avex, Sony, SM Entertainment, YG Entertainment, YG Plus, Cube Entertainment, Vivid Seats, Dolby Electronics, and many others.  There are currently 30 holdings in MUSQ. 

Where do investors go to learn more about investing in MUSQ?

Investors can go to www.musq.com.