2 ETFs To Invest In The Fast-Growing Metaverse

Issuers of exchange-traded funds (ETF) have been racing to launch metaverse-focused products, eyeing the fast-expanding sector that is expected to reach $5 trillion by 2030.

Almost a year after Facebook announced a shift from pure social media and changed its corporate name to Meta Platforms (NASDAQ:META), the momentum is still building. Research by McKinsey highlights that venture capital and private equity funds allocated around $13 billion into the sector last year.

The metaverse is an integrated network of virtual worlds that aim to enhance human experiences using virtual and augmented reality.

Although many companies are contributing to the technology, Meta Platforms CEO Mark Zuckerberg’s views on the topic get significant attention, and in late June Zuckerberg said:

“We hope to basically get to around a billion people in the metaverse doing hundreds of dollars of commerce, each buying digital goods, digital content, different things to express themselves…”

Here are two ETFs for investors looking to bet on this new technology.

1. Roundhill Ball Metaverse ETF

• Current Price: $8.74
• 52-week range: $7.70 - $17.11
• Expense ratio: 0.59% per year

Not many emerging technologies receive as much hype as the metaverse.

For instance, according to research group GlobalData:

“40% more companies mentioned ‘Metaverse’ in their company filings documents [during the first quarter of 2022].”

First on today’s list is the Roundhill Ball Metaverse ETF (NYSE:METV), which invests in global names actively involved in the metaverse. The fund was launched in June 2021 and became the first ETF dedicated to the metaverse.

METV Daily

When the fund first hit the market, it traded under the ticker META. However, after Facebook’s ticker change, it became METV.

METV tracks the Ball Metaverse Index, and currently has 43 holdings. Around 80% are US-based companies, while the remaining 20% come from Asia.

The ETF’s net assets of $493 million are heavily invested in large-caps (96.1%). and in sub-sectors including gaming platforms (19.7%), computing components (18.7%), cloud solutions (16%), social networks (14.3%).

The top 10 holdings account for more than 60% of the fund and include Roblox (NYSE:RBLX); Apple (NASDAQ:AAPL); NVIDIA (NASDAQ:NVDA); Microsoft (NASDAQ:MSFT); and Unity Software (NYSE:U).

METV is down nearly 42.2% year-to-date (YTD) and 41.6% over the past 12 months hitting a 52-week low on June 16.

The ETF offers a relatively straightforward way to invest in the upcoming metaverse trend so it deserves further due diligence.

2. ProShares Metaverse ETF

• Current Price: $35.65
• 52-week range: $31.40 - $47.11
• Expense ratio: 0.58% per year

Companies of all sizes are entering the metaverse market including well-known names like Walmart (NYSE:WMT), Nike (NYSE:NKE), Gap (NYSE:GPS), Walt Disney (NYSE:DIS) owned, Hulu, and French luxury group Kering (EPA:PRTP) owned, Gucci.

Our second fund for today is the ProShares Metaverse ETF (NYSE:VERS) which offers exposure to companies expected to be at the center of the metaverse.

VERS Daily

VERS, which started trading in March 2022, has 40 holdings and net assets of just $6.2 million.

Like METV, VERS is also dominated by US-headquartered companies (83%), while the rest come from Asia. It tracks the Solactive Metaverse Theme Index that is rebalanced quarterly.

The ETF’s sectoral allocations include media & entertainment (29.8%), semiconductors (26.4%), software & services (18.2%), technology hardware & equipment (9.3%), and consumer durables & apparel (6.4%).

Over 45% of the fund is concentrated in the top 10 stocks which include Vuzix (NASDAQ:VUZI), which supplies augmented reality (AR) wearable technologies, Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Microsoft; and Apple.

VERS has dropped 24.7% from its Mar. 29 peak hitting a record low on June 16.