Hello all,
I was wondering if there was an equivalent of the S&P 500 for Pokemon cards, i.e. an index fund/ETF tracking the top Pokemon cards by market cap to give one exposure to the card market without physically owning any cards.
If such an investment does not exist, what would creating one entail? I would propose to call it the SMP 500 (for SMPratte 500), and would greatly appreciate any guidance on producing it or identifying whether it is feasible.
Thank you very much for any suggestions.
You cannot invest in it, but you can track complete set values through PokemonPrice.com in the link below
Thanks, that’s quite helpful.
I suppose another idea for an investment may be to create an ETF based off a set e.g. Base Set, rather than to track the top 500 cards by market cap, given that the latter is volatile and because it would be quite hard to determine a card’s market cap. Any thoughts?
Can anyone name a successful ETF that deals with solely illiquid non income producing assets?
Idk if it exist or not; just curious.
I couldn’t think of any off the top of my head so I did some searching, and ultimately did not find a single remotely well-known/successful ETF exclusively holding those sorts of assets. Lots of ETFs hold relatively illiquid assets, like lots of illiquid shares in private companies, but those typically still generate income.
Fundamentally, though, the main reason to have a Pokemon cards ETF would be to increase liquidity in the first place. Whilst the underlying assets may be illiquid, the ETF itself would not be.
This gets into the idea of tracking error. There’s no real way for the fund to be able to buy and sell the underlying asset frequently enough to ever truly accurately own the appropriate amount. Of course there’s also no such thing as fractional shares of Pokémon cards.
One thing this could help is price discovery. If 1st Edition Base Charizard 10 hasn’t sold publicly in months, the more liquid ETF would be able to show the market value of the underlying asset more accurately than the asset itself due to the infrequency of trading. Kind of a trade off.
Either way this is ultimately pointless. You could make an index to track the most valuable cards and that would be useful (probably exclude trophies/limit it to set cards otherwise it would be impossible) but people would rather just buy a card than some sort of fractional ownership. If you can’t afford a $1000 card would you rather buy 1/10th of it you’ll never see or hold in person or just buy a $100 card you can appreciate? We care about the art, sentimentality, and history of the cards; we care about money exclusively for stocks.
A booster box is kinda of like an index fund. You have a little bit of each card in the set factored into the price. If I were to choose one, maybe base set unlimited which would reflect the overall health of the hobby
Thank you - you definitely raise some important concerns here. Considering that an ETF would not be able to instantly buy the underlying assets at the fair rate, would a closed end fund with a limited number of shares perhaps work better? Although at this point I do understand you’re basically just selling partial ownership of one large collection.
The price discovery point is really interesting, and it would be another advantage to having this increased liquidity. ETFs for individual cards could certainly be interesting, as it’s easier to buy more of an individual card, and the rate that people pay for the ETF should reflect the market price quite fairly. The issue here, as you mentioned, is that someone interested in buying an ETF for a single card may as well just buy that card, and they’re probably not interested in buying 1% of a $40,000 card.
I appreciate that everyone at E4, including myself, finds most of the value in physically owning the card. But having a highly liquid option could still be a fun investment proposition, would serve as an outlet for all the uninterested whales who simply want to invest, would increase the accuracy of prices, and could increase the trading volume of the hobby. Whilst you and I find the value in admiring the card in real life, a lot of people find that physical aspect to be a burden or a risk, similar to purchasing gold as opposed to a gold ETF.
That’s a really good analogy that I never really considered! The booster box is pretty much an index fund for the relevant set, although commons may receive more weightage and non-guaranteed holo rares may have slightly less weightage (noting that the holos obviously still form the majority of the box’s price tag).
That being said, while boxes certainly accomplish the task of gaining exposure to a certain set, they are definitely less liquid. While you won’t struggle to sell your 1st Edition Base Set box, you can’t exactly expect $100,000 (or whatever the appropriate figure is) to be in your hands on the very same day. Boxes are also difficult to purchase, and you won’t be able to invest a specific dollar value into more expensive boxes, either. That being said, they are probably the closest equivalent to an index fund, so thank you very much for bringing them to my attention!
You could maybe create a fund tracking pokemon cards, but not an ETF as they are publicly traded. The launch of an ETF by anybody else but a bank / ETF provider is basically impossible (regulatory frameworks, expensive etc)
PSA 9 base unlimited Charizard is always a good card to track as it’s “the most accessible” original Charizard in mint condition and has a lot of activity on eBay, but I don’t see investing in an Pokemon ETF ever being legal in the USA at least.
You’d likely want to have something with more activity to be an index fund. One you’d need someone who’s job it is to track down sales and record them as a lot of them happen outside of eBay. With such little supply on the market who’s to say a group doesn’t manipulate the prices.
And then I’d say we can’t necessarily say that 1 booster box = cumulative probability of getting certain cards because at some point the boxes become very rare and their pricing might be based off the boxes rarity rather than the possible contents inside.
Huh, thanks very much for that knowledge. This is largely a hypothetical, but at least I now know what the more reasonable approach would be. Cheers!
Makes sense, thanks for the practical advice. As you said in your next message, though, if it’s just tracking a single card the price can be easily manipulated, which wouldn’t exactly make the ETF/fund/equivalent a particularly safe buy. It’d need to be more diversified to get around that, at which point your concerns about booster boxes differentiates it from them.
Honestly, I see no reason for an smp500 like fund in pokemon. If you want something like the smp500 just invest in the smp500.
I think the discussion so far has laid out some of the benefits of the SMP 500 (SMPratte 500), from increasing liquidity and being diverse to investor-friendliness and not carrying the risk of physical goods.
Obviously it’s no substitute for the real S&P 500 - I just used a similar name because the opportunity was there. The SMP 500, by contrast, would be far smaller and far more volatile. The point isn’t to make a safe return on investment over a long time like with the S&P 500 - the point is just to have a more liquid asset with high exposure to a large part of the Pokemon card market.
Not an ETF, but I came accross this today and perhaps it could be something that you mean.
If this would exist for Pokémon cards, awesome 
www.masterworks.io/
PWCC was working on something like this to show the growth of high end sports cards vs DJIA.
I don’t like it one bit for fine art as there are so many variables and most are 1 of 1… Private deals, speculation on the artist, insider info, purchased with intention to store in an offshore vault and resell, purchase with the intention to keep forever, purchase by a museum or to donate to museum, tax write off/evasion/money laundering… The list goes on. Frankly if you are relying on a tool like this to judge your $10M Warhol purchase you’re not going to make money, art industry consultants make bank because of insider info.
Yeah, that does look really cool. It also seems really involved though, and I’m not sure if the margins on Pokemon cards would really be enough to get sustain something so professional. Nevertheless, cool find!
It’s just meant to be a fun idea! 
It’s partially serious but also in some ways a satirical response to/solution for those (justifiably) looking for an easy way to invest in Pokemon cards. Come on, the SMP 500?