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The metaverse is a trending technological development which has the potential to reshape our society. Any technology with that sort of potential becomes very attractive to prospective investors. However, it should be widely understood that any investment with high potential returns also comes with a high level of risk. A way to reduce this risk is by utilizing ETFs to gain broad exposure to the companies which will benefit from the wide adoption of the metaverse.
What is the Metaverse?
The metaverse is an immersive digital environment that is considered the next generation of the modern internet, where users will potentially socialize, work and play. However, the exact form that the metaverse will take is not fully fleshed out.
The metaverse could potentially be a virtual reality environment where a human user can use hardware such as a headset and controllers to navigate the virtual landscape. It may also come in the form of augmented reality, where digital properties and objects are overlaid on top of the physical world.
The potential for disruption from this technology is vast, with some touting that the metaverse could have as large of an impact on society as the advent of the internet. Whether or not that is true remains to be seen. However, it is undeniable that the metaverse will have an impact, not only in the media space but also in business and the everyday functioning of our society.
Companies That are Investing in the Metaverse
Currently, the metaverse is still mainly in development by some of the largest technology companies in the world. The foundation is being laid by companies such as Meta (formerly Facebook), Alphabet (formerly Google), Apple, and Microsoft.
Most of these companies wish to function as the access point to the metaverse. For example, Meta can provide access to the metaverse through Facebook, which is the largest social media platform in the world. Alphabet could give access to the metaverse through Google, the most widely used search engine. Apple could provide access to the metaverse through iPhones, which have a dominant market share in the smartphone market.
Other companies that are investing in the space include gaming and technology companies such as:
- Tencent Holdings Ltd.
- Activision Blizzard Inc.
- NetEase Inc.
- Electronic Arts Inc.
- Adobe Inc.
Investment Opportunity of the Metaverse
The upside of investing in the metaverse is the broad use-cases of the digital environment and its application in many different industries and aspects of society. For example, the metaverse could bring about innovation in communication, entertainment, education, healthcare, and e-commerce, among others.
It is difficult to quantify the total investment opportunity; however, Morgan Stanley estimates that the metaverse has a potential $8.3 trillion consumer expenditure total addressable market within the US alone.
There is a significant risk that comes with investing in the metaverse. As mentioned, the technology is still in the early stages of development, and there is a risk that the metaverse may not be adopted as quickly as expected or not adopted at all, depending on consumer preferences. Furthermore, the privacy issues that the mega-cap technology companies are facing will be exacerbated by the metaverse.
Canadian ETFs with Exposure to the Metaverse
The metaverse is an exciting future technology which may be attractive for investors who can bear the high risk. Some ETFs that have exposure to the equity securities that may benefit from the proliferation of the metaverse include:
1. MESH (Evolve Metaverse ETF)
Management Strategy: Active
AUM: $10.4M
Expense Ratio: 0.15%
Inception: November 29, 2021
2. FMTV (Fidelity Total Metaverse Index ETF)
Management Strategy: Passive
AUM: $5.1M
Expense Ratio: 0.50%
Inception: May 18, 2022
3. MTAV (Horizons Global Metaverse Index ETF)
Management Strategy: Passive
AUM: $4.2M
Expense Ratio: 0.55%
Inception: November 29, 2021
4. CMVX (CI Galaxy Metaverse Index ETF)
Management Strategy: Passive
AUM: $1.0M
Expense Ratio: 0.50%
Inception: April 28, 2022
Data for this article is as of June 1, 2022.
Disclaimer: This article is limited to the dissemination of general information pertaining to investment strategies and financial planning and does not constitute an offer to issue or sell, or a solicitation of an offer to subscribe, buy, or acquire an interest in, any securities, financial instruments or other services, nor does it constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment.
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