There's an ETF for that? Investing in the Music Industry with MUSQ

MUSQ analysis & breakdown

"Paid streaming subscribers are expected to more than double to 1.2B paid subscribers by 2030 and global music industry revenues are expected to more than double to $152 billion," says David Schulhof, Founder & CEO of MUSQ, LLC. "MUSQ captures all this growth and innovation in a convenient and portable way to invest in the global music industry.”

MUSQ offers investors exposure to the global music industry and this growth by tracking  the MUSQ Global Music Industry Index. This index encompasses a broad range of companies involved in various aspects of the music industry.

MUSQ gives investors exposure to the entire music industry ecosystem including streaming, content and distribution, live music events and ticketing, equipment and technology, and satellite and radio.

The holdings in MUSQ are varied, covering different segments of the music industry:

• Conglomerates with Music Business Segments: Companies like Amazon (AMZN), Apple (AAPL), and Alphabet (GOOGL) fall into this category. They are not primarily music companies but have significant music streaming services like Amazon Music, Apple Music, and YouTube Music, respectively. These services form a part of their diversified business models.
• Music Production Companies: Sony Group Corp (SONY) is a prime example, being a major player in the music production and publishing industry. Its diverse operations in music represent a significant segment of its overall business.
• Music Streaming and Royalty Trusts: Spotify Technology SA (SPOT) is a leading name in this category, primarily known for its music streaming services. Tencent Music Entertainment Group (TME) also fits here, focusing on music streaming and associated services in China.
• Live Music Events and Ticketing: Endeavor Group Holdings Inc (EDR) and Live Nation Entertainment Inc (LYV) are notable players in live music events and ticketing, organizing concerts and selling tickets.
• Satellite and Broadcast Radio: Sirius XM Holdings Inc (SIRI) is a well-known name in satellite radio, offering music channels among its services.
• Equipment/Technology: Companies like Sonos Inc (SONO) and Dolby Laboratories Inc (DLB), known for their audio technology and equipment, cater to both professional and consumer markets in music.

MUSQ showcases a diverse blend of sectors within the music industry. Key sectors include information technology, featuring companies that provide essential music production and streaming technology, and communication services, which encompasses firms central to music streaming, broadcasting, and distribution. The consumer discretionary sector is also represented, highlighting businesses involved in consumer-facing music services, equipment, and live events.

Geographically, MUSQ spans several key regions. The United States dominates the ETF's holdings, reflecting its pivotal role in the global music industry. Japan contributes significantly, particularly in music equipment and production. South Korea's dynamic music scene, especially in K-pop, is also represented. Additionally, European firms add diversity, particularly in music streaming and production.

Are there alternatives to MUSQ?

For music investors looking to shop around, MUSQ's competitors currently include the Clouty Tune ETF (TUNE) and the more niche, geographic and industry-specific KPOP and Korean Entertainment ETF (KPOP), both of which are also listed on NYSE ARCA.

TUNE is the most direct competitor to MUSQ, tracking the Solactive Clouty Tune index. However, compared to MUSQ it has attracted far fewer assets under management at $500,973 compared to $12.9 million, despite having an earlier inception date of June 21, 2023, compared to July 6, 2023. That being said, it is cheaper with a 0.65% expense ratio compared to 0.78% for MUSQ.

Investors looking to target the Korean entertainment business can do so via KPOP, which focuses on 30 Korean-listed stocks involved in the country's domestic entertainment industry. While both MUSQ and TUNE have exposure to some of these companies, KPOP has a pure-play focus on them. The ETF charges a 0.75% expense ratio and has attracted just over $3 million in AUM.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.