Metaverse ETFs to Watch in 2023

Key highlights:

• The Metaverse is thought to have amazing potential for a range of applications, such as being able to host virtual concerts with unlimited participants and having virtual stadiums built for fans to watch a game from anywhere in the world.
• Several highly-regarded corporations have invested in the research and development of the Metaverse, including but not limited to Meta, Microsoft, and NVIDIA.
• Resulting from high investor interest, Metaverse ETFs have recently been created by fund managers to provide investors with an option to own holdings in metaverse companies at a lower cost.

What is a Metaverse ETF?

ETFs are an exchange-traded product that allows investors the ability to purchase shares in a portfolio of assets at a lower cost compared to buying individual stocks. Metaverse ETFs are thematic ETFs that offer investors exposure specifically to companies involved in building and developing the Metaverse. By being exchange-traded, ETFs also provide market opportunities for traders to buy and sell ETFs whenever they wish.

💡Find out more: What is an ETF?→

💡Find out more: Which Thematic ETFs are right for you?→

Top Metaverse ETFs to watch

Data as of 13 April 2023

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1. Roundhill Ball Metaverse ETF ($NYSEARCA:METV)

Market Capitalisation: US$454.1m

Stock price (as of 13/04/2023): US$9.10

Stake Platform Bought / Sold (1 January 2023- 31 March 2023): 52% / 48%

The Roundhill Ball Metaverse ETF was designed to closely track the Ball Metaverse Index, which follows companies actively involved in developing the Metaverse and those who will benefit from its generated revenues and profits.

Currently, the largest Metaverse ETF in terms of market cap, the fund invests in a range of international stocks across several financial markets (e.g. NYSE, SEHK, JP). The largest holdings in the METV ETF are Nvidia (8.55%), Roblox (8.09%), Apple (7.89%), Meta Platforms (5.89%) and Microsoft (4.13%).

Launched by Roundhill Investments in June 2021, this ETF was actually the first Metaverse ETF to be launched. The investment return is at -37.70% since inception as at 31 March, however, its expected growth is forecast to be much stronger.

The fund's ticker symbol was originally 'META', but effective upon the open of trading on January 31, 2022 was changed to 'METV'.

2. Fidelity Metaverse ETF ($NASDAQ:FMET)

Market Capitalisation: US$14.3m

Stock price (as of 13/04/2023): $23.28

Stake Platform Bought / Sold (1 January 2023- 31 March 2023): Not available

Similar to the Ball Metaverse ETF above, the Fidelity Metaverse ETF tracks a metaverse index, this time one that Fidelity itself created. The underlying index tracks the performance of global companies in the metaverse space – specifically those that develop, manufacture, distribute or sell products related to establishing the metaverse. The FMET ETF itself however, only invests 80% of its assets in metaverse stocks, and the remaining 20% of the fund is invested in depositary receipts belonging to the same stocks.

The top 5 holdings in this metaverse ETF are Adobe (5.85%), Meta Platforms (5.11%), Nvidia (5.02%), Apple (4.76%), and Alphabet (4.75%). As of April 2023, the fund has 63 different holdings.

Since the fund's inception in April 2022, it has returned -5.85% so far.

3. Fount Metaverse ETF ($NYSEARCA:MTVR)

Market Capitalisation: US$5.4m

Stock price (as of 13/04/2023): $16.36

Stake Platform Bought / Sold (1 January 2023- 31 March 2023): Not available

The Fount Metaverse ETF is designed to track the Fount Metaverse index, which has strict and unique criteria in selecting the best metaverse stocks to add to its index. Two of the most important ones are that only companies who engage in the four components (online gaming, augmented and virtual reality, cryptocurrencies, social and digital media) of the metaverse may be included, and that the companies in the index must be expected to derive more than 50% of their revenues from metaverse-related services or products. MTVR would thus expose investors to only companies heavily involved in the metaverse industry.

As of April 2023, the top 5 holdings in MTVR are currently Apple (11.86%), Meta Platforms (4.72%), Alphabet (4.01%), Roblox (2.95%) and Pinterest (2.71%). In total, the ETF holds stakes in 51 different companies. While the a huge percentage of the ETF's holdings are in American companies, it offers exposure to a select few international metaverse stocks as well, such as Square Enix, Xiaomi, and Kakao Games.

As of Dec 2022, the Metaverse ETF has returned -33.6% since its inception in Oct 2021.

4. BetaShares Metaverse ETF ($ASX:MTAV)

Market Capitalisation: A$2.6m

Stock price (as of 13/04/2023): $10.35

Stake Platform Bought / Sold (1 January 2023- 31 March 2023): Not available

The BetaShares Metaverse ETF prides itself as the first metaverse ETF launched in Australia. Launched only in August 2022, the fund's market cap is relatively small. It follows the Bloomberg Metaverse Select Index, providing investors exposure to companies that develop 3D modelling, VR/AR metaverse technology, artificial intelligence, and those involved with the digital assets and currencies used in the metaverse.

As of April 2023, the top holdings of this new ETF include Meta Platforms (7.1%), Nvidia (6.8%), Electronic Arts (4.3%), Alphabet (4.2%) and Microsoft (4.1%). In total, it has 45 holdings with exposure to several international stocks across Asia and Europe. In contrast to the other ETFs in this list, MTAV is the only one to have a positive return since inception. Since it was first available for trade in August 2022, it has returned 4.97%.

💡Related: Top 10 Dividend ETFs in Australia→

💡Related: Top 10 Vanguard ETFs in Australia→

What are the largest companies tied to the Metaverse?

Behemoths in the tech industry, including Meta Platforms, Microsoft, Google and Tencent, are those most invested in furthering metaverse technology. Google for example, has put in funds for the development of virtual reality. Meta already has virtual reality technology in its Oculus headset, and is exploring further development for virtual worlds. Similarly, Tencent has an internal division focused on metaverse technology for gaming.

Aside from established corporations, smaller, innovative companies such as Roblox and Sea Limited are also players in the industry. Roblox is one of the few virtual platforms being created, and it already has over 50 million daily users. Sea Limited (SE) on the other hand, dominates Southeast Asia and is working towards becoming one of the largest gaming, e-commerce, and payments platform on the metaverse. Additionally, there are several other companies listed in the Asian and European exchanges that also contribute heavily to the industry.

What are the advantages of investing in Metaverse ETFs?

The advantage of investing early into the metaverse industry is that metaverse technology is still under development, and as a result, any future metaverse behemoths would most likely be undervalued at the present (think Amazon's market price before it became the top e-commerce company).

Additionally, the metaverse is estimated by Bloomberg to potentially become an extremely high-growth industry that could go into the trillions. While this does not guarantee future results, Metaverse ETFs offer investors exposure to a diversified portfolio in metaverse stocks without requiring heavy research and effort. Investors may also find it reassuring to have an actively managed portfolio by professionals.

What are the disadvantages of investing in Metaverse ETFs?

While Metaverse ETFs are great at offering investors diversification, the downside to it is the high management fees associated with them. For the ETFs listed in this article, all of them list their fees at around 0.6%, with the Fidelity Metaverse ETF having the lowest at 0.39%. The largest fund, the Roundhill Ball Metaverse ETF, has a fee of 0.59%.

Additionally, another disadvantage of investing in an ETF is that an investor will not be able to make an individual investment decision to pick stocks on their own. In order to increase exposure in a company, the investor will have to separately purchase shares of the company in the stock market.

Metaverse ETFs FAQs

Are Metaverse ETFs a good investment?

While the metaverse is an exciting and upcoming industry, investment decisions must be heavily substantiated with market analysis before investors jump in. Only certified professionals are able to offer investment advice, especially with regard to buying financial instruments. To decide on whether metaverse ETFs would be a good investment for your circumstances, it might be worth consulting with them.

With regard to the industry, however, it is a fact that metaverse technology is evolving quickly, and some institutional investors have already added metaverse shares into their holdings. Additionally, other ETFs related to the metaverse also exist, such as information technology ETFs, cryptocurrency ETFs and cybersecurity ETFs – providing investors some exposure to the metaverse even if they aren't comfortable investing in it directly.

The exchange-traded products mentioned above are across U.S. ETFs and Australian ETFs, providing you a choice of what market you want to invest in.

What stocks are related to the Metaverse?

As mentioned, it is generally large tech companies involved with the metaverse, as research and development requires a significant amount of capital invested. However, companies in the interactive media, home entertainment, software, semiconductors, crypto market, and even internet marketing are considered to be related to the metaverse.

What are the risks of investing in the Metaverse?

Like every financial investment, there are risks associated with seeking a return higher than your traditional savings account. Given that the metaverse is a new and still-developing industry, the risks it exposes investors to would be significantly higher than investing in established industries.

The greatest risk to investors who choose to buy metaverse ETFs and stocks is that if the metaverse fails to substantiate, and the capital invested into its development just gets written off.

This does not constitute financial product advice nor a recommendation to invest in the securities listed. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking appropriate financial or taxation advice before investing.