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Back in 2021, Facebook founder Mark Zuckerburg launched Meta to capitalize on the up-and-coming metaverse, a digital world linked to physical assets using virtual and augmented reality. Everyone jumped on the bandwagon and soon announced their plans for the metaverse. For investors, metaverse ETFs have become a new thematic investment offering as asset management firms traverse the 3D virtual world in search of alpha.
The global metaverse market was estimated to be $38.85 bn in 2021 and is expected to grow at a CAGR of 39.4% from 2022 to 2030, as per Grand View Research.
So, what can users do in the metaverse? You can go shopping, play games, go on a vacation, buy land, advertise products and almost every other thing that is possible in the real world. The opportunities are endless.
South Korea’s K-pop stars have already landed on the metaverse platform ZEPETO as avatars and held a virtual fan signing event. In Thailand, a virtual shopping mall called V-Avenue allowed shoppers to virtually visit 200 shops. Baidu’s Xirang metaverse offers users a virtual tour of a famous Shaolin temple.
A podcast by Goldman Sachs Research pegged the metaverse as an $8 tn opportunity for generating revenue and monetizing assets. Companies such as Tencent, NetEase and Bilibili, Agora, China Mobile and Sony have made it to JPMorgan’s list of potential beneficiaries of the metaverse trend.
Investor interest peaked after Zuckerberg launched Meta and we are seeing metaverse ETFs cropping up in every part of the world. Bloomberg Intelligence research found that metaverse ETFs could balloon to $80 bn in assets under management by 2024, with annual fees of $600 m. With some Asian companies at the forefront of the metaverse, let’s look at some ETFs invested in the trend in the region.
Premia Asia Innovative Technology and Metaverse Theme ETF
Hong Kong-based ETF issuer Premia Partners launched a thematic fund for investing in Asian companies developing metaverse business in 2018. The fund is investing in 50 companies across sectors such as tourism, construction, automotive, healthcare, media & entertainment, and telecom, among others.
The metaverse ETF currently has assets under management of $5 m and charges an annual management fee of 0.50%. Some of the top holdings of the fund are Pinduoduo ADR (3.05%), Sungrow Power Supply (2.78%), Coupang Inc (2.75%), Unigroup Guoxin Microelectronics (2.44%) and Trina Solar Co (2.40%).
Country-wise, the fund is mainly invested in China (51.04%), followed by Japan (24.08%), South Korea (15.51%), Taiwan (7.15%) and Singapore (1.63%). The fund’s sector allocation is concentrated in the information technology sector (41.61%), followed by consumer discretionary (22.41%) and communication services (16.18%), among others.
The fund’s benchmark index is the Premia FactSet Asia Metaverse and Innovative Technology Index, which has declined 28.1% year to date. MSCI Asia Index has fallen 17.5% while MSCI China Index slipped 19.5% during the same period.
The metaverse ETF is listed on the main board of the Stock Exchange of Hong Kong and can be traded with Hong Kong Dollar (ISIN – HK0000433398) or the US Dollar (ISIN – HK0000433406)
All data as of August 31, 2022.
SAMSUNG Asia Pacific ex NZ Metaverse Theme ETF
Launched in mid-2022, the Samsung metaverse ETF (HK0000860996) seeks to achieve long-term capital growth by investing in companies in the Asia Pacific region that provide products, services or technologies enabling the development and operation of the metaverse. This is an actively managed fund and does not track any index or benchmark.
The ETF is traded using Hong Kong dollars and charges an annual management fee of 0.85%. Performance data for the ETF is not available as it was listed on the Stock Exchange of Hong Kong this July.
The top holdings of the Samsung metaverse ETF are TSMC (6.05%), Sony (5.72%), Tencent (4.84%), Goertek (4.24%) and Samsung Electronics (4.11%).
While Samsung Asset Management has not disclosed the country-wise investment distribution, the metaverse ETF is focused on three markets — China, South Korea, and Japan.
All data as of August 31, 2022
CSOP Metaverse Concept ETF
Hong Kong-based CSOP Asset Management has launched the thematic metaverse ETF (HK0000825338)that is mainly investing in companies listed on the New York Stock Exchange, and NASDAQ, or traded on the US over-the-counter markets.
Listed on the Stock Exchange of Hong Kong in February 2022, the fund has USD as its base currency. The issuer charges a management fee of 0.99% per annum.
The ETF has declined 26.41% since its inception. Sector-wise, the fund is mainly invested in information technology (55.28%), communication services (30.74%), consumer discretionary (6.52%), real estate (2.72%) and industrial (0.84%).
The top holdings of the ETF are Meta Platforms (8.46%), TSMC-ADR (7.06%), Microsoft (6.02%), Apple (5%), Roblox (4.62%), and Amazon (4.50%), among others.
All data as of October 3, 2022.
