The Metaverse is a game-changing new concept in terms of user experience and technology. While still an ominous notion, the Metaverse is widely regarded as the next phase of the internet, in which online experiences will be merged together to produce an immersive virtual experience.
It encompasses an immersive virtual universe in which users can interact with one another, their environments, and AI-powered humans in very realistic ways. Owing to the rapid surge in interest in the Metaverse, they are an appealing investment possibility for investors and asset managers with a moderate to high-risk appetite.
Businesses have already started investing substantially in the Metaverse to gain a one-up advantage. According to one study, the Metaverse received nearly $10 billion in venture capital in 2021, with online games, virtual worlds, augmented reality, and VR gaming receiving the majority of the funding.
Metaverse exchange-traded funds, or metaverse ETFs, could be the future of how people invest in the Metaverse, due to their ease of use and ability to balance risk, and are becoming an increasingly popular way to invest in and profit from the sector’s advances.
What are Metaverse ETFs?
Metaverse ETFs are exchange-traded funds that invest in the strongest Metaverse-related stocks. They have a low to moderate level of diversification and aim to profit from early and high-value investments in the emerging Metaverse sector.
ETFs are primarily managed passively, meaning that fund managers do not buy and sell securities in ETFs on a regular basis in order to make a profit and enhance their value. Rather, they locate potentially high-value assets and invest in them over time, which is why emergent technologies like the Metaverse are a suitable fit.
According to Bloomberg, ETF assets concentrated on the metaverse have risen to $2.2 billion, thanks in part to Facebook’s parent company changing its name to Meta Platforms Inc., indicating the increasing importance of these emerging virtual communities.
The majority of the new exchange-traded products have only been available for a few months, but they’re already proving to be a flourishing market for thematic investment.
The industry-leading ETF is currently the Roundhill Ball Metaverse ETF (METV), with $856 million under management. METV, in a crowded market, also slashed management fees from 75 to 59 basis points in February, making it the cheapest fund in the industry group.
Why invest in Metaverse ETFs?
In 2022 and beyond, Metaverse ETFs will be an enticing and straightforward investment vehicle for technology investors. It gives investors access to a rapidly growing sector that is still in its early stages, giving them a competitive advantage.
Because investment information surrounding the Metaverse is still limited, Metaverse ETFs are even more vital for potential investors. It may be tough to manually find, track, and acquire shares from top-performing Metaverse firms, but buying a metaverse ETF is considerably easier.
That said, the Metaverse is still a volatile sector and nascent technology, with no guarantees as to its timeline or how quickly it will be adopted by the market. Furthermore, the SEC has a history of being sceptical of innovative technology, having rejected several bitcoin ETFs last year. It may take a while to approve Metaverse ETFs, which means that, for the time being, money will only be routed through a small number of possibilities.
5 Metaverse ETFs to consider
Other than the aforementioned Roundhill Ball Metaverse ETF (METV), what are some other intriguing Metaverse ETFs you can invest in? Below are our top 5 picks:
1. Amplify Transformational Data Sharing ETF (BLOK)
BLOK is an actively managed ETF that invests in companies that develop and use blockchain technology, with an ETF portfolio containing 45 holdings.
Coinbase Global, Inc. (NASDAQ:COIN), a US firm that runs a cryptocurrency exchange platform and is set to play a key role in the metaverse’s digital economy, is BLOK’s largest investment.
Coinbase Global, Inc. is owned by a number of premium hedge funds. 50 hedge funds were optimistic on Coinbase Global, Inc. in Q3 of 2021, with a combined stake of around $3 billion.
2. Fount Metaverse ETF (MTVR)
MTVR is an ETF that tracks an index of around 50 firms with a metaverse theme. As of February 2022, the fund has about $13 million in AUM.
One of the chief stocks in MTVR’s portfolio is Meta Platforms, Inc. (FB), a firm that pioneered the idea for the Metaverse. Meta Platforms, Inc. is a popular tech stock among savvy investors, with 248 hedge funds owning shares worth $38.5 billion in the firm as of Q3 2021.
3. Horizons Global Metaverse Index (MTAV.TO)
MTAV.TO is a new ETF that debuted on the Toronto Stock Exchange in November 2021. It aims to match the performance of the Solactive Global Metaverse Index, which includes companies that are predicted to grow and contribute to the Metaverse’s development.
Digital marketplaces, digital infrastructure, digital payments, creator economies, AR/VR, and gaming are among the businesses included in this ETF’s portfolio.
One of the ETF’s top holdings is Visa Inc. (V). As of Q3 2021, it was considered a top stock pick for savvy investors. Visa Inc. is a fintech and payments firm that entered the metaverse in August 2021 with a $150,000 purchase of non-fungible tokens.
4. Evolve Metaverse ETF (MESH.TO)
MESH.TO is the first Canadian metaverse ETF, providing investors with access to an actively managed diversified portfolio of companies involved in the Metaverse’s growth. The ETF owns 25 different securities and manages $13.362 million in assets. Clients are exposed to global market leaders from the United States, China, Taiwan, Japan, and Singapore through the ETF.
5. Roundhill Ball Metaverse ETF (META)
META is designed to provide investors with exposure to the metaverse by replicating the performance of the Ball Metaverse Index, which is made up of a portfolio of global firms working in the metaverse.
In summary
Metaverse investments are becoming more appealing to early adopters as clients get more comfortable investing in digital assets. According to predictions, revenue from virtual worlds could reach as much as $400 billion by 2025, while Bloomberg intelligence suggests that the market opportunity for the metaverse is expected to reach $800 billion in the coming two years.
Investing in speculative assets such as metaverse stocks might be a fantastic way to accumulate wealth with the potential for future profits, but it’s also an unpredictable and often risky method to do so. That being said, ETFs can make the process less risky and more straightforward. Always remember to diversify your investments to achieve balance in your portfolio.
In 2022, there is little doubt that more strategies addressing this theme are likely to emerge – possibly even in Europe – with remarkable early asset collecting, demonstrating investors’ enthusiasm for speculative future sector plays.
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