Rise of Metaverse ETFs as they march into Europe

Metaverse ETFs became the hottest commodities on the ETF block ever since Facebook Founder and CEO Mark Zuckerberg announced the company's strategic push into the nascent ecosystem on October 28th, 2021. On google, the term Metaverse ETF was one of the most searched terms by ETF enthusiasts, who were hoping to jump aboard a theme predicted to become the Internet Killer.  

In 2021 in total, investors added $990 million into America-domiciled Metaverse ETFs, out of which $980 million went into the first-ever Metaverse ETF the Roundhill Ball Metaverse ETF (METV, formerly META). Since Facebook's Q4 makeover, METV saw its assets grow from $163 million (October 31st, 2021) to $932 million (in 2 months!).

American Investors: Investing in Metaverse ETFs

METV seeks to track the Ball Metaverse Index and invests in globally listed companies involved in the Metaverse such as social network companies, gaming platforms, providers of computing components, or cloud solutions — among others. Around 80% of the portfolio is based in the U.S., while the rest comes mostly from Asia. The fund currently comprises 45 holdings, including Nvidia (8.92%), Microsoft (8.08%), Meta Platforms (6.57%), Apple (4.64%), Amazon.com (4.5%), Taiwan Semiconductor (4.39%) — to name a few. METV has a total expense ratio of 0.59% and trades primarily on the NASDAQ.

The success story of Roundhill's Metaverse ETF prompted other ETF issuers in America to launch their own products and cater to a growing audience of intrigued Metaverse investors. The Fount Metaverse ETF (MTVR) launched on the NYSE Arca on October 27th, then came Canada's first Metaverse ETF, the actively managed Evolve Metaverse ETF (MESH) on November 24th, followed shortly after by Horizons Global Metaverse Index ETF (MTAV). On January 27th, 2022, Subversive Capital Advisor launched the actively managed Subversive Metaverse ETF (PUNK) on the Cboe BZX Exchange. The fund will invest in companies engaged in one or more of the seven layers of the Metaverse: experience, discovery, creator economy, spatial computing, decentralization, human, interface and infrastructure. Unlike most metaverse funds, PUNK shorts Meta Platforms.

Explaining the reason behind this approach to Bloomberg, Subversive Capital Advisor founder Michael Auerbach said: "Facebook seems to be the antithesis of what actual consumers want their digital futures to look like."

Asian Investors: Investing in Metaverse ETFs

The metaverse craze hit Asia — now home to over 10 Metaverse ETFs. As of January 19, 2022, there was 8 Metaverse ETFs listed in South Korea, such as the Mirae Asset Tiger Fn Metaverse ETF (400970), the Samsung KODEX K-Metaverse Active ETF (401470), and the KB KBSTAR iSelect Metaverse ETF (401170). The combined 8 drew over $1 billion in inflows, according to data from Samsung Asset Management.

Thailand’s first metaverse fund, the MFC Metaverse Equity (M-META), was launched by Bangkok-based MFC Asset Management in December last year. The fund invests at least 80% of its net asset value in the Roundhill Ball Metaverse ETF.

In Hong Kong, CSOP AM launched the CSOP Metaverse Concept ETF (3034.HK) on February 21st, 2022. The actively managed fund invests mainly in US-listed companies that are directly or indirectly providing products or services which contribute to the development of the Metaverse. As of March 14th, 2022, the fund's top names include Meta Platforms (6.75%), Nvidia (6.26%), Apple Inc. (6.12%), Advanced Micro Devices (5.96%), and Sony Group (5.64%).

European Investors: How to Invest in Metaverse ETFs

Europe, a laggard in the Metaverse ETFs space, will finally welcome multiple new launches this year. In a joint press release, ETC Group and HANetf announced the imminent launch of Europe's first Metaverse ETF. The new Metaverse ETF (name and fees to be revealed) will list on the London Stock Exchange during March 2022 and will be available for sale across Europe.

The fund will track the Solactive ETC Group Global Metaverse Index, which provides exposure to the metaverse industry, including companies active in VR/AR, 3D graphics, semiconductors, high-speed wireless communications, online gaming, video streaming — among other industries and themes.

Hoping to mimic its U.S. success, Roundhill Investments revealed it will launch a European doppelganger of their U.S. listed METV ETF — the Roundhill Ball Metaverse UCITS ETF (METV). The fund is expected to list on the Deutsche Boerse later this month with a total expense ratio (TER) of 0.59% and is eyeing a London Stock Exchange listing down the road.

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