I see a fascinating trend among my clients, especially the younger ones. They want their investments to reflect their passions. They ask me about tech, they ask me about crypto, and more and more, they ask me about sports. They want to know if they can invest in their favorite teams or the next big athletic brand. This curiosity often leads to a single question: what are “athletic mutual funds”?
The term itself is more of a concept than a formal category. You will not find it listed as a Morningstar fund style. But the idea is powerful. It represents a strategy of investing in the vast and interconnected global sports industry. As a finance professional, I see real merit in this approach. It taps into a durable human passion with massive economic tailwinds. But it also requires a clear-eyed view of the risks and strategies involved.
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What Exactly is an “Athletic Mutual Fund”?
An athletic mutual fund is not a fund that owns the Green Bay Packers. Professional sports teams are generally privately held. Instead, it is a fund—whether a traditional mutual fund or an ETF—that concentrates its investments in companies that profit from the world of sports.
This ecosystem is much larger than just Nike and Adidas. It is a complex web of industries that includes:
- Apparel & Footwear: The giants like Nike (NKE), Adidas (ADDYY), Lululemon (LULU), and Under Armour (UAA).
- Equipment & Retail: Companies that make the gear, like Callaway Golf (MODG), or sell it, like Dick’s Sporting Goods (DKS).
- Media & Broadcasting: The entities that own the rights to show the games, like Disney (DIS) with ESPN, Fox Corporation (FOX), and streaming services.
- Live Events & Experiences: Companies like Live Nation (LYV), which owns Ticketmaster and promotes countless sporting events.
- Athletic Endeavors: This includes everything from gym chains like Planet Fitness (PLNT) to sports betting companies like DraftKings (DKNG).
An athletic fund builds a portfolio from these types of companies, offering a diversified bet on the entire sports industrial complex.
The Investment Case for the Sports Industry
Why would I consider this a viable investment theme for a portion of a portfolio? The thesis rests on several strong pillars.
1. Global Passion and Loyalty: Sports fandom is tribal and incredibly sticky. A person might change their bank or their phone provider, but they rarely change their allegiance to a sports team. This deep emotional connection creates reliable, generations-long demand for related products and services.
2. Recurring Revenue Streams: This is not a one-time purchase industry. It is built on cycles. New sneaker models drop every season. Subscription fees for streaming services recur monthly. Stadiums sell tickets and concessions game after game, year after year. This creates predictable revenue.
3. The Secular Growth of Health and Wellness: This is perhaps the most powerful macro trend. Globally, people are spending more money on fitness, wellness, and active lifestyles. A fund focused on this theme is a direct bet on this long-term behavioral shift.
4. Media Rights Inflation: The value of live sports broadcasting rights continues to skyrocket. As cord-cutting fractures traditional TV, live sports remain one of the few must-see live events. This gives sports leagues and media companies tremendous pricing power.
How to Invest: Funds vs. Individual Stocks
You have two main paths to invest in this theme.
Thematic Mutual Funds and ETFs: This is the “athletic mutual fund” approach. It provides instant diversification. Instead of betting on one company’s next sneaker design, you bet on the entire industry. Some notable examples include:
- ETFMG Sports Betting & Gaming ETF (BETZ): Focuses on the growing sports betting and iGaming market.
- Roundhill Sports Betting & iGaming ETF (BETZ): A similar, competing ETF.
- The Consumer Discretionary Select Sector SPDR Fund (XLY): While broader, it holds significant weight in companies like Nike and Amazon, which is a major player in sports retail.
Individual Stocks: This is a more concentrated and riskier approach. It requires deep research into individual companies. Picking the winning apparel brand or the most successful media company is difficult. For most investors, the fund route is the more prudent choice.
A Performance Reality Check
Let’s be clear. Thematic investing carries specific risks. A sports-themed fund is often less diversified than a broad market index fund like the S&P 500. It is vulnerable to economic downturns. Consumer discretionary spending is often the first thing to cut in a recession. People might delay buying new gym shoes or cancel a streaming subscription.
The sector can also be volatile. A scandal involving a major endorser can tank a stock. A failed product launch can hurt a brand. The performance of these funds will be inherently more volatile than the broader market.
We can model the potential growth of an investment, but we must factor in higher potential fees for these specialized funds. Let’s assume an investment of \$10,000. A broad market index fund might have an expense ratio (f) of 0.10%. A thematic ETF might have a higher fee of 0.75%. If both achieve a 10% gross return (r) over 20 years (n), the difference is notable.
The future value calculation is:
FV = PV \times (1 + r - f)^nBroad Market Fund (f = 0.10%):
FV = \$10,000 \times (1 + 0.10 - 0.001)^{20} = \$10,000 \times (1.099)^{20} \approx \$64,000Thematic Sports Fund (f = 0.75%):
FV = \$10,000 \times (1 + 0.10 - 0.0075)^{20} = \$10,000 \times (1.0925)^{20} \approx \$58,000The higher fee translates to \$6,000 less in your pocket, a significant drag on compounding.
My Final Playbook for Investors
So, where does this leave us? I believe athletic mutual funds can be a compelling satellite holding in a well-diversified portfolio. They allow you to align your investments with your interests and capitalize on long-term global trends.
