Global X has launched a new thematic equity ETF in the US targeting companies shaping the development of the metaverse.
The metaverse refers to a future iteration of the internet that will take the form of a perceived virtual universe.
The Global X Metaverse ETF (VR US) has been listed on Nasdaq with an expense ratio of 0.50%.
The metaverse is a term used to describe the concept of a future iteration of the internet, made up of persistent, shared, 3D virtual spaces linked into a perceived virtual universe.
The metaverse is expected to be richly integrated into the physical world, thereby creating a new medium and economy for work, leisure, and innovation, while transforming long-standing industries and markets such as finance, banking, retail, education, health, and fitness, among many others.
While still in its infancy, the metaverse has already attracted billions of dollars of investment. Morgan Stanley analysts predict the metaverse has the potential to generate $8.3 trillion in total consumer expenditure in the US alone, depending on the level of disruption.
Pedro Palandrani, Director of Research at Global X, said: “Whether it’s playing video games with friends, buying digital items, or consuming media, the wide range of potential uses offered by the metaverse makes it a possible successor to today’s internet. The metaverse’s foundational infrastructure is in place and companies are increasingly vocal about their participation in its advancement, both in word and capital commitment.
“With the launch of VR, Global X is leveraging its expertise in thematic investing to provide investors with exposure to companies that are positioned to benefit from the development and commercialization of the metaverse.”
Methodology
The fund is linked to the proprietary Global X Metaverse Index which selects its constituents from a universe of developed and emerging market stocks with market capitalizations greater than $200 million and average daily trading volumes above $2m.
The index screens for companies with business activities related to four metaverse sub-themes: Augmented & Virtual Reality and Spatial Computing; Creator Platforms; Creator Economy; and Digital Infrastructure & Hardware.
The methodology selects the 30 largest pure-play companies – those deriving more than 50% of their revenue from eligible activities, as well as pre-revenue firms that are expected to derive at least 50% of their revenue from these activities. The index also includes the ten largest non-pure-play companies – those with less than 50% revenue exposure.
Constituents are weighted by market capitalization subject to an individual cap of 6% and an aggregate cap of 40% on all stocks with weights above 4.5%.
The fund is the sixth metaverse thematic ETF in the US. The largest is the $700m Roundhill Ball Metaverse ETF (META US) which comes with an expense ratio of 0.75%, while the cheapest is the recently launched Fidelity Metaverse ETF (FMET US) which costs just 0.39%.