6 of the Best Metaverse ETFs to Buy in 2023 |  Invest

Mark Zuckerberg’s attempt to strategically transform Facebook into what is now known as Meta Platforms Inc. (ticker: META) may have flopped and underperformed so far, but that doesn’t necessarily spell the end of the overall concept of the metaverse.

For many enthusiasts and investors alike, the idea of ​​a virtual, connected universe seems ideal as the next frontier and a natural evolution of existing internet, virtual reality, augmented reality, gaming, and social media platforms.

“The term ‘metaverse’ broadly refers to the idea of ​​a digitally connected, interactive and immersive universe where people can communicate, interact and connect over the internet,” said Marco Manoppo, research director and team leader at Digital Asset Research .

The Metaverse sits at the intersection of many different technologies and objectives. For the former, the developments in VRAR and Blockchain Technology could benefit from increasing use cases and demand. For the latter, the metaverse could provide a new avenue for traditional businesses such as e-commerce, advertising, virtual goods, gaming, and content creation.

“We define the metaverse as the next iteration of the internet,” said Dina Ting, senior vice president and head of global index portfolio management at Franklin Templeton. “In other words, it is the successor to today’s methods of connectivity and communication via shared virtual and mixed reality spaces that are three-dimensional, decentralized and interactive.”

Though still in its infancy, the prospects of the metaverse are inseparable from the overall pace of digitization.

“Metaverse growth is underpinned by the macrothesis that people are spending increasing amounts of time online, particularly in emerging markets,” says Manoppo. “As a result, the means by which people connect, consume and transact business are becoming increasingly digital.”

Other experts are optimistic about the overall level of expected growth.

“The metaverse represents a multi-trillion-dollar, multi-decade opportunity for investors,” says Ting. “The total addressable market is estimated to reach as many as 5 billion users, or almost 63% of the world’s population, with some analysts predicting revenue generation of between $8 trillion and $13 trillion by 2030.”

To participate in the growth of the more diversified metaverse, investors can buy dedicated stocks exchange traded funds, or ETFs, with a thematic focus. “This can benefit the average investor by taking the guesswork out of company selection and ensuring optimal Metaverse exposure,” says Ting.

Manoppo agrees, noting, “Benefits of using a thematic ETF for Metaverse investing include broader exposure to a diversified basket of companies and reduced individual stock risk.”

Here’s a look at six of the best ETFs offering pure Metaverse exposure in 2023:

Metaverse ETF expense ratio
Fount Metaverse ETF (ticker: MTBR) 0.7%
Roundhill Ball Metaverse ETF (METV) 0.59%
Global X Metaverse ETF (VR) 0.5%
First Trust Indxx Metaverse ETF (ARVR) 0.7%
ProShares Metaverse ETF (VERSE) 0.58%
Wedbush ETFMG Video Game Tech ETF (GAMR) 0.75%

Font Metaverse ETF (MTBR)

“The term metaverse can often be used across industries, ranging from video games, blockchain, VR/AR and computer graphics technologies,” says Manoppo. “That’s why investors need to know which industries they’re buying when choosing a Metaverse ETF. One option here is MTVR, which owns 51 Metaverse-related companies weighted by market cap.”

MTVR tracks the Fount Metaverse Index, which scans stocks by size and size liquidity, a set of Metaverse-related keywords and revenue with at least 50% coming from Metaverse-related services or products. The index is rebalanced and composed annually, and the ETF charges an expense ratio of 0.7%, or $70 per year for a $10,000 investment.

Currently, MTVR’s largest holdings include Apple Inc. (AAPL), Meta Platforms and Alphabet Inc. (GOOGL). Gaming companies like Roblox Corp. (RBLX) are also presented. The ETF is globally diversified but highly concentrated technology sector given the nature of its holdings. Investors should also know that its net worth is quite small at just over $5 million and that the ETF is lightly traded, with an average volume of less than 3,000 shares per day.

Roundhill Ball Metaverse ETF (METV)

METV tracks the Ball Metaverse Index, which categorizes its underlying holdings into five Metaverse-related themes: Computer Components, Gaming Platforms, cloud solutions, social networks and others. Due to the high proportion of technology companies in the US, 76.3% of the ETF’s 50 underlying companies are domestically based, with China, South Korea and Japan being the next largest markets.

The dominance of US tech giants in this ETF also means METV has one big cap Focus, with 95% of its portfolio having a market cap greater than $10 billion. Notable holdings in this ETF include Nvidia Corp. (NVDA), Apple, Roblox, Meta and Microsoft Corp. (MSFT). METV currently calculates an expense ratio of 0.59% and has a options chain present.

Global X Metaverse ETF (VR)

VR takes an unconstrained approach to Metaverse investing by targeting the Global X Metaverse Index. This index includes companies regardless of sector or geographic categorization provided they are positioned to benefit from metaverse growth and commercialization.

VR’s 41 holdings therefore cover a wide range of industries, including social media, cloud computing, 5G infrastructure, digital payments, semiconductor, blockchain and software. Again, big-cap US tech stocks like Nvidia, Meta, Microsoft, and Coinbase Global Inc. (COIN) have high weights.

However, VR has a larger focus outside of the US, with international stocks such as Tencent Holdings Ltd. (0700.HK), Nexon Co.Ltd. (3659.T) and Nintendo Co.Ltd. (7974.T) ranks in the top 10. The ETF charges an expense ratio of 0.5%. However, liquidity is an issue: The fund has less than $3 million in net assets and an average trading volume of less than 500 shares per day.

First Trust Indxx Metaverse ETF (ARVR)

ARVR takes a rigorous approach when selecting Metaverse-related stocks. The underlying index, the Indxx Metaverse Index, sets strict criteria that potential stocks must meet. Eligible companies must derive at least 50% of their revenues or assets from the Internet; online platforms; payments; optics and displays; Semiconductor; Hardware or 5G.

As a result of these reviews, ARVR ends up with a concentrated portfolio of 50 stocks, with companies with a market cap of less than $10 billion halved and evenly distributed across the ETF’s overall portfolio for better coverage. Notable holdings include Sony Group Corp. (6758.T), Nvidia, Nexon, Nintendo and Apple. ARVR calculates an expense ratio of 0.7%. Investors should also be aware that the ARVR is tiny for an ETF with less than $2 million in net assets and an average daily volume of just over 1,000 shares.

ProShares Metaverse ETF (VERSE)

VERS tracks the Solactive Metaverse Theme Index, which is intended to be representative of a broad spectrum of 40 companies involved in all facets of the metaverse. Again, top holdings include the usual selection of large-cap US tech companies such as Nvidia, Apple, Meta, Microsoft and Alphabet. Overall, US stocks make up around 85% of this ETF.

In terms of industry presence, VERS focuses on three main areas: software and services at 21%, media and entertainment at 25%, and semiconductors at 24%. This gives it broad access to multiple points in the Metaverse ecosystem, be it in terms of the software it runs on, the services provided within it, or the hardware supporting it. VERS calculates an expense ratio of 0.58%.

VERS, like many of the previously mentioned ETFs, is still small, with net assets of about $6.5 million and an average daily trading volume of less than 1,100 shares.

Wedbush ETFMG Video Game Tech ETF (GAMR)

A natural progression of the metaverse is integration into existing video games. “Currently, gaming IPs like Fortnite and Roblox are already becoming a prototype metaverse for young people to socialize in,” Manoppo said. One ETF that is able to continue to benefit from this trend is GAMR, which tracks the EE Fund Video Game Tech Index.

“To thrive, a metaverse needs a lot of content, especially games,” said Ted Pollak, president and portfolio manager at EE Fund Management LLC. “It also requires servers to handle the massive workload required by billions of users, as well as client visualization and input products such as controllers, displays and headsets.”

GAMR is well constructed to provide exposure to a portfolio of video game Industrial companies, many of which already run their own massively online multiplayer worlds. The ETF holds well-known companies such as Paris-based Ubisoft Entertainment SA (UBI.PA), Electronic Arts Inc. (EA) and Activision Blizzard Inc. (ATVI) for an expense ratio of 0.75%.

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