New metaverse ETF jumps into the next tech boom

Posted: 13 December 2021 6:07 pm
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The potential for the metaverse is huge, but it’s early to pick the winners and losers. Metaverse ETFs let you play many of the contenders.

The crowded race to build a virtual world got another player recently as First Trust filed for a metaverse exchange-traded fund (ETF). The First Trust Indxx Metaverse ETF will trade on the Nasdaq and use the Indxx Global Metaverse Index as a benchmark.

The goal of this new Metaverse ETF is to invest in stocks designed to benefit from the buildout of the metaverse, a market Bloomberg forecasts could be worth $800 billion by 2024. Potential winners in this virtual-reality future include headset makers, AI companies, 3D rendering technology companies, wireless networks, CPU and GPU makers and disk storage companies.

It’s not the first Metaverse ETF

Rival Roundhill launched a metaverse ETF (META) in June, and South Korea-based ETF provider Fount launched a metaverse ETF (MTVR) in October. First Trust ETF would be the third Metaverse-themed fund to come out this year.

The Rival Roundhill ETF is up 11% from the day it started trading, while the Fount ETF is down 6% in one month of trading. However, this is a relatively long-term play, which makes it hard to judge these ETFs by their performance so far.

The Metaverse is a new virtual reality

When Facebook changed its name to Meta Platforms (FB, changes to MVRS in 2022), it meant more than just rebranding. The company plans to spend between $10 and $15 billion more in 2022 than it spent the previous year. Meta will use these funds to lay the foundation and build its virtual world where everyone can connect via virtual reality headsets, using the metaverse to shop, play games and more.

Many companies stand to benefit from the Metaverse

Aside from Meta Platforms, numerous companies will play a role. For example, Nvidia (NVDA) could be a candidate for its extremely powerful GPUs, while the 3D rendering engine Unreal by Unity (U) could be used to render the environments within the metaverse.

As of December 2021, AMD is the only confirmed Meta Platforms-connected metaverse stock. Meta will use AMD’s Epyc chips to power Meta’s servers.

But the metaverse concept of a connected virtual reality goes well beyond Meta Platforms, and it’s way too early to name all the winners — or losers.

With so many companies that could potentially benefit from the metaverse, investing in a Metaverse ETF instead of individual companies may be prudent, as it raises your chances of investing in the right metaverse companies.

The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.

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