Investors should be prepared to be inundated with the term metaverse in the early part of this decade. This hot tech topic is luring eyeballs and igniting an investment race to build more complex and engaging virtual spaces. Today, I want to look at two metaverse focused exchange-traded funds (ETFs) that millennial investors may want to target. But first, let’s go over what we mean by the metaverse.
What is the metaverse and why should investors be excited?
In late October, Facebook founder and CEO Mark Zuckerberg announced that the company would change its name to Meta (NASDAQ:FB). This reflected a general push to build the “metaverse,” a bold iteration of the internet that aims to support online 3-D virtual environments. Theoretically, the experience would be augmented by virtual and augmented reality headsets. Zuckerberg’s presentation laid out a future that would see the metaverse act as something of a virtual home for users. It would be used for work, socialization, and play. Beyond that, it would theoretically allow for more interactions in what has become an increasingly isolated world.
The COVID-19 pandemic has seemingly accelerated the development of the metaverse. It triggered a flight from work at the office to work at home. In theory, the metaverse would enable human beings to live a richer social life from their desk or their couch. Meanwhile, some critics have expressed skepticism and concern, as the metaverse could further compromise information privacy and exacerbate user addictions to digital and social media.
Regardless, millennial investors should be interested in getting in on this technological race. Market researcher ReportsAndData recently projected that the global metaverse market size would reach $872 billion by 2028. Moreover, this would represent a CAGR of 44% over the forecast period dating from 2021.
Here are two ETFs focused on this emerging phenomenon
Horizons Global Metaverse ETF (TSX:MTAV) seeks to replicate the performance of the Solactive Global Metaverse Index. It debuted on the TSX on November 26. Indeed, the timing was not the greatest, as the ETF launched just as domestic and global stocks hit a bout of volatility. However, this also provides millennials with a chance to snatch up this ETF at a discount.
Some of the top holdings in this account includes household names like Apple, Nvidia, Amazon.com, and Microsoft. Nearly 90% of its holdings are made up of United States and China-based companies. This fund possesses a management fee of 0.55%.
Evolve Metaverse ETF (TSX:MESH) is another metaverse-focused ETF that millennials should considering snatching up before the new year. This ETF seeks to invest in equity securities that are involved in the development of the metaverse. It launched on November 24, 2021. Moreover, the Evolve Metaverse ETF is slightly pricier fee-wise with a management fee of 0.60%.
The top holding in this ETF is also Apple. Meanwhile, it is also invested in stocks like QUALCOMM, Autodesk, and Intel. Shares of this ETF have dipped sharply since its inception. Millennials should seek to buy the dip in both metaverse-focused funds in late 2021.