A Metaverse ETF Rush?

A Metaverse ETF Rush?
Reda Farran, CFA

about 2 years ago1 min

Mentioned in story

ProShares, which debuted the first US bitcoin ETF earlier this year, is launching a new fund that tracks companies working on metaverse-themed initiatives like virtual worlds, 3D experiences, personal avatars, augmented reality, and more.

It’s just the latest in a slew of firms looking to capitalize on the emerging metaverse trend. And for good reason: just look at the Roundhill Ball Metaverse ETF, which launched six months ago and has already grown to $1 billion in size. Then there’s the four metaverse ETFs that launched in South Korea in October, and just last month another two launched in Canada on the same day. All in, there’s now over $2 billion invested in metaverse ETFs globally.

The ProShares Metaverse Theme ETF won’t have any direct investments in crypto or NFTs, but will track the Solactive Metaverse Theme Index instead, which includes stocks of companies exposed to the metaverse industry. That includes tech giants Apple, Microsoft, Intel, Meta Platforms (formerly Facebook), and Nvidia. You can see the ETF’s top ten holdings, which make up almost half of the fund’s weight, in the graph above.

But it’s worth remembering that all these tech giants also make up a large portion of regular US stock market indices. So the risk for investors in the upcoming ProShares Metaverse Theme ETF is that they invest in something that moves largely in line with the broader market, doubling down on their existing tech exposure and all the while paying higher fees (ProShares’ ETFs are rarely cheap…). After all, thematic funds provide asset managers with attractive fees and a new source of growth, but most of them underperform the market in the long term.

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