Metaverse ETFs are the hot new thematic investment

Metaverse ETFs are the hot new thematic investment
Investors are piling into exchange-traded products that offer exposure to companies jockeying to create virtual realities.
FEB 14, 2022

The metaverse has officially hit the mainstream, with global assets now pouring into new exchange-traded funds that offer exposure to companies jockeying to create virtual realities. 

ETF assets focused on the metaverse have exploded to about $2.2 billion, according to Bloomberg, which is due in large part to the change in the name of Facebook’s parent company from Facebook Inc. to Meta Platforms Inc. in October, reflecting the growing relevance of these new virtual communities.

“If an investor believes that we're in the midst of a shift to a digital-first world, it would make sense that investments in the digital space have a chance to hold their value, and maybe increase in value over time,” said Treyton DeVore, co-founder of the fee-only financial planning firm AllStreet Wealth.

Most of the new exchange-traded products have launched in the past few months and they're quickly becoming a booming market for thematic investing. 

The Roundhill Ball Metaverse ETF (METV) is the industry leader, with about $856 million under management, according to Bloomberg research. In a burgeoning marketplace, METV cut management fees this month from 75 basis points to 59 bps, making it the cheapest fund available in the category.

The latest fund, the Subversive Metaverse ETF (PUNK) launched in January, focuses on companies both in the U.S. and overseas, and comes with an expense ratio of 75 bps. The actively managed fund looks for companies that have exposure to any of the seven layers of the metaverse: experience, discovery, creator economy, spatial computing, decentralization, human interface and infrastructure. 

“If a client came to me interested in [metaverse ETFs] and wanted to learn more or was considering adding them to their portfolio, we would evaluate the overall risk, the client's risk tolerance and the overall goal for the investment just like with traditional assets and make recommendations based on those results,” DeVore said.

The ETFs' top holdings include tech companies like Microsoft Corp. and gaming companies like Roblox Corp., among other firms, according to Bloomberg.

DeVore likens the new products to traditional real estate with a modern twist. 

“Sure, you can make money by investing in real estate,” he said, “but location plays a huge role. You have to do your due diligence, and you have to understand the heightened risks of alternative investments.”

As clients become more comfortable investing in digital assets, metaverse investments are increasingly attractive to early adopters. Revenue from virtual worlds could approach $400 billion by 2025, according to estimates by ARK Research. Bloomberg Intelligence expects the market opportunity for the metaverse to top $800 billion in the next two years.

“Investors of the future are going to have unlimited amounts of investment choices, and the adviser's job is to match investments to their risk tolerance, time horizon and personal preferences,” DeVore said. “We’re much closer to metaverse allocations than much of the industry may realize.”

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.