Tema Eyes Prediction Market Expansion with New ETF Filing

• Tema’s new ETF takes a bold, infrastructure-first approach to prediction markets
• Tema’s ETF focuses on the ‘picks and shovels’ of the prediction market world.
• Tema’s active management strategy aims to outpace the prediction market trend

Tema ETFs, an upstart issuer of exchange traded funds (ETFs), threw its hat in the prediction market ETF ring with a Securities and Exchange Commission (SEC) filing for the Tema Trading & Prediction Markets ETF.

The asset manager revealed plans for the ETF in a late Wednesday (May 13) filing, and it’s a departure from the other proposed prediction markets ETFs in that the Tema fund won’t hold event contracts.

Rather, if it comes to life, the ETF will hold shares of companies engaged in the prediction markets industry as well as those facilitating trading of event contracts.

The Adviser defines a company as a ‘Trading and Prediction Markets Company’ if at least 50% of its annual revenue is derived from products or services that provide infrastructure, software, data, and services that enable individuals and institutions to trade securities, commodities (including Event Contracts) and other financial instruments on traditional prediction and similar markets,” according to the Tema regulatory document.

For pre-revenue companies or those that have been in business less than a year, the fund’s managers will have discretion over whether those stocks merit inclusion in the fund.

Tema ETF Could Gain Traction

Assuming it’s approved by the SEC, the Tema Trading & Prediction Markets ETF could gain a following because there’s enthusiasm among retail investors for accessing prediction market equities. For those market participants, the problem is the big names such as Kalshi and Polymarket are privately held.

The same goes for CME Group (NASDAQ: CME) and Intercontinental Exchange (NYSE: ICE). The former partners with FanDuel Predicts while the latter is the biggest investor in Polymarket.

Among the currently public companies, DraftKings (NASDAQ: DKNG), FanDuel owner Flutter Entertainment (NYSE: FLUT) and Interactive Brokers (NASDAQ: IBKR) could be candidates for inclusion in the Tema ETF, assuming it comes to market.

Tema Prediction Market ETF Details

The SEC filing indicates the selection universe for the ETF will include domestic, Chinese, European, Japanese and South Korean companies.

“The Fund will invest in micro-, small-, medium- and large capitalization companies. The Fund generally will invest in companies that have a market capitalization of at least $100 million and there is no upper limit on the market capitalization of a portfolio company. The Fund generally invests in companies that have at least a three-month average daily traded value of at least $500,000,” according to the regulatory document.

However, the filing didn’t include a ticker or an expense ratio — hallmarks that usually indicate a new ETF is close to launching.