What is a Metaverse ETF?
Metaverse ETFs are financial products designed to offer investors exposure to the Metaverse. They are funds that invest in globally listed securities that provide services and products that support the infrastructure and applications of the Metaverse.
Metaverse may be defined as the next generation of the internet, although it means different things to different people. According to Bloomberg Intelligence, the market opportunity for the Metaverse can reach $800 billion by 2024. Metaverse stocks expose investors to companies that have the potential to benefit from the expected growth of the Metaverse market.
“The metaverse will likely infiltrate every sector in some way in the coming years, with the market opportunity estimated at over $1 trillion in yearly revenues.”
J.P. Morgan: Opportunities in the Metaverse
What is the Roundhill Ball Metaverse ETF?
The Roundhill Ball Metaverse ETF (METV) is the world’s first Metaverse ETF with $863 million assets under management. METV, which was launched on June 30, 2021, seeks to closely correspond to the performance of the Ball Metaverse Index (BALLMETA).
Note that Roundhill Investments changed the fund’s symbol from META to METV effective January 31. The issuer said that this would have no effect on its investment objective or strategy
The Ball Metaverse Index is the first globally designed index to track the performance of the Metaverse. The Index consists of a tiered weight portfolio of globally-listed companies that are actively involved in the Metaverse.
What companies are in a Metaverse ETF?
“We see companies of all shapes and sizes entering the metaverse in different ways, including household names like Walmart, Nike, Gap, Verizon, Hulu, PWC, Adidas, Atari and others.”
J.P. Morgan: Opportunities in the Metaverse
The METV fund, which is rebalanced quarterly, may include:
Companies developing infrastructure essential to the Metaverse such as Cloudflare and Nvidia.
Gaming engines responsible for the creation of virtual worlds including Unity and Roblox.
Pioneers in content, commerce, and social for the Metaverse, such as Tencent, Sea, and Snap.
Source: Roundhill Investments
An increasing number of investment companies are betting on the Metaverse narrative. This is a list of some of the Metaverse ETFs, which have already been launched:
Fount Metaverse ETF (MTVR)
ETF currently tracks the Fount Metaverse Index of around 50 companies that follow the metaverse theme.
Evolve Metaverse ETF (MESH)
Canada’s first Metaverse ETF, actively managed, with $13.155 million AUM, is listed on Toronto Stock Exchange (TSX).
Horizons Global Metaverse Index ETF (MTAV)
Currently, the ETF seeks to replicate the performance of the Solactive Global Metaverse Index, net of expenses. It is listed on Toronto Stock Exchange (TSX).
Subversive Metaverse ETF (PUNK)
It is an actively managed fund that invests in globally listed securities that provide services and products which support the infrastructure and applications of the Metaverse.
The Simplify Volt Web3 ETF (WIII)
Simplify Asset Management filed an application to launch Simplify Volt Web3 ETF, which would trade under the ticker WIII.
How can you buy Metaverse ETFs?
First, you have to open a broker account. You need a broker, which has only US entities and is regulated in the US. Why? US issuers have not produced the so-called Key Investor Document (KID) for their ETFs mainly because of differences in the US and EU regulatory environments. A KID is part of the European Union’s Packaged Retail and Insurance-based Investment Products (PRIIP) regulation. It is a standardized document that provides investors with information about the product.
PRIIP requires funds selling in the EU to have a KID as of January 1, 2020. As a result of the regulation change, European platforms removed US ETFs from their offerings.
As META doesn’t yet have ETFs issued in the European Union, European investors need a US broker if they want to invest in Metaverse ETFs. Having said that, several Metaverse ETFs are expected in Europe in the foreseeable future.
There is already an exchange-traded product (ETP) issued in Europe, although not in the European Union. The 21Shares Decentraland ETP (MANA) seeks to track the investment results of Decentraland. The ETP is easy to buy through brokers, like Interactive Brokers, Saxo Bank, and Swissquote. The issuer, 21Shares AG, which issues crypto exchange-traded products, is registered in Zug, Switzerland with offices in Zurich and New York City.
Another advantage of US brokers is that the limit of SIPC protection is $500,000, which includes a $250,000 limit for cash. This is significantly higher than the protection of €100,000 for cash, and €20,000 for securities in Europe.
Our broker recommendations to invest in Metaverse ETFs
Alpaca Trading is a commission-free API stockbroker based in San Mateo, CA offering zero-commission stock and ETF trading. As a general rule, Alpaca Trading is available only for US residents. However, there is a beta live trading account available on a limited basis for non-US residents. These invite-only beta accounts require a $30,000 initial deposit, and you can only deposit via wire transfer.
Tastyworks is a young, up-and-coming US broker focusing on options trading. Trading with US stocks and ETFs is possible, but a bit complicated compared with other brokers. Tastyworks accepts customers from many countries. These include almost all EU countries, most South and Central American countries, as well as India, Indonesia, New Zealand, and Turkey, among others.
TradeStation is a US broker, but clients from all over the world can open an account. Note that as a non-US customer, you will have access to fewer account types and fee structures, such as no-commission trading.
There isn't a definitive list of eligible countries, but unless you're a citizen of a country that is usually banned from financial markets such as North Korea or Sudan, you will most likely be able to open an account with TradeStation.