Fidelity diving into the Metaverse with an ETF. Should you?

Posted: 4 February 2022 3:18 pm
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Here’s a look at the Metaverse ETF proposed by fund giant Fidelity and three you can already buy.

Fidelity filed an application with the Securities and Exchange Commission (SEC) last week for an exchange-traded fund (ETF) called the Fidelity Metaverse Index ETF. This comes after ProShares filed for a Metaverse-themed ETF in December.
As the name suggests, the goal of these ETFs is to track companies that may be part of the Metaverse — the virtual world that Meta Platforms (FB) (formerly Facebook) and a host of its partners and competitors are building.
Here’s a look at the Fidelity plan and three Metaverse ETFs you can buy right now.

What is the Fidelity Metaverse ETF?

The new fund will closely track the Fidelity Metaverse IndexSM. This index moves with the performance of companies involved in developing and manufacturing products and services for the Metaverse. This would include companies like Meta itself (FB), Nvidia (NVDA), Advanced Micro Devices (AMD), Unity (U) and Roblox (RBLX).
Fidelity uses the term Metaverse to “describe a future state of the internet characterized by a network of both augmented reality and virtual worlds that can be experienced persistently and in a shared environment by large numbers of users,” per the SEC filing.
For more on this emerging Metaverse sector, see our guide.

Metaverse-themed ETFs you can buy now

If the SEC approves Fidelity’s Metaverse fund, it will join several funds that are already utilizing this concept that includes blockchain, non-fungible tokens (NFTs) and Web 3.0 technologies. Some of the Metaverse-themed ETFs you can now invest in are:

  • Roundhill Ball Metaverse ETF (METV): Launched last fall, it has slumped in 2022 with the tech sector. Top holdings are Nvidia, Microsoft (MSFT) and Meta Platforms.
  • Fount Metaverse ETF (MTVR): Also launched last fall, this one has also slumped. Top holdings are Apple (AAPL), Alphabet (GOOGL) and Meta Platforms.
  • Subversive Metaverse ETF (PUNK): Just launched last week, this is an inverse ETF, meaning it goes the opposite way of the Metaverse companies. For example, it was short Meta and so profited when the company stock nosedived this week.

Unlike ETFs that track a common index like the S&P 500, the holdings on these and future upcoming Metaverse ETFs could vary widely. It will be important to watch their top holdings and returns if you invest.

ETFs may be a better choice for Metaverse investors

Meta Platforms plans to spend between $10 and $15 billion more in 2022 than it spent the previous year on its Metaverse. A huge chunk of these funds will go to companies that will lay the foundation for the Metaverse. The trick is — we don’t know for sure which companies will take a piece of this multibillion-dollar cake.
AMD is one confirmed company, but most other companies are speculation at this point. Another complication: There are competing platforms other than the one Meta Platforms is building. So investing just in Meta Platforms and its partners isn’t investing in the whole envisioned Metaverse.
As an investor, you can invest in as many companies as you believe will be part of this Metaverse, but this requires a lot of research and can be time-consuming. Because of that, investing in a Metaverse-themed ETF may be the more prudent choice for now. And from what we can see, there will be more Metaverse ETFs to choose from in the coming months.
Kliment Dukovski doesn’t own any ETFs mentioned in the article as of the publishing date.

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