How to Invest in the Metaverse With ETFs

We cover everything you need to know about investing in metaverse ETFs.

kent
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Research Lead
Reviewed by: Lisa Barr
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Edited by: Lisa Barr

How do you invest in the metaverse? As you might imagine, our short answer is metaverse ETFs. But before we get into the specifics of exchange-traded funds in this space, we’ll provide background on the meaning of metaverse, different ways to invest in it, and the benefits and risks associated with investing in the next phase of the internet. 

What Is the Metaverse? 

The metaverse is a term used to describe a hypothetical future iteration of the internet, where people will engage with immersive virtual worlds and experiences. In this virtual universe, users will be able to interact with each other and digital objects in real time, using avatars that represent themselves. 

The concept of the metaverse has been popularized by science fiction, particularly in Neal Stephenson's novel Snow Crash, which depicts a fully realized metaverse. However, the term has gained renewed interest in recent years due to advancements in virtual reality, augmented reality and blockchain technology. 

Proponents of the metaverse see it as the next step in the evolution of the internet, with potential applications ranging from entertainment and gaming to education and commerce. Critics, on the other hand, raise concerns about privacy, security and the potential for the metaverse to exacerbate existing inequalities. 

How to Invest in the Metaverse 

Investing in the metaverse can be done in several ways, including stocks, ETFs, venture capital funds and cryptocurrencies. 

Here are the main ways to invest in the metaverse: 

  • Stocks: Investors can buy individual stocks of companies that are involved in the development or use of metaverse-related technology. These can include companies involved in virtual reality, augmented reality, gaming, social media and blockchain technology.  
  • ETFs: Investors can also invest in Metaverse ETFs, which offer diversified exposure to various companies within the metaverse industry. This can be a good option for investors who want exposure to the metaverse industry but don't want to take on the risk of investing in individual stocks. 
  • Venture capital funds: Venture capital funds are investment vehicles that pool money from investors to invest in startups and early-stage companies. Some venture capital funds may focus on investing in companies involved in the metaverse industry. This can be a higher-risk investment strategy, as startups are often more volatile than established companies. 
  • Cryptocurrencies: Some cryptocurrencies, such as ether (ETH), Decentraland (MANA) and Axie Infinity (AXS), are focused on developing metaverse-related projects or platforms. Investing in these cryptocurrencies can offer exposure to the metaverse industry, but it's important to understand the risks associated with investing in cryptocurrencies. 

What Is a Metaverse ETF? 

A metaverse ETF is an exchange-traded fund that invests in companies that are involved in the development or use of technology related to the Metaverse. As the concept of the metaverse gains more attention and investment, some investors may want to gain exposure to this emerging industry through an ETF. 

A metaverse ETF may hold stocks of companies involved in virtual reality, augmented reality, blockchain technology, gaming, social media and other related fields. The ETF's holdings can range from large technology companies to smaller startups that are focused on metaverse-related projects. 

Investing in a metaverse ETF can offer diversification across various companies and sectors within the metaverse industry, which may be appealing to investors who want to participate in this emerging trend but are unsure which specific companies to invest in. 

What Are the Top Metaverse ETFs? 

The metaverse industry is still in its early stages, and there are currently no ETFs that are exclusively focused on metaverse-related companies. However, there are several ETFs that hold companies involved in the development or use of metaverse-related technology.  

Some of the top metaverse ETFs include: 

  • Roundhill Ball Metaverse ETF (METV): This ETF invests in companies that are involved in the development and use of virtual worlds, augmented reality and other metaverse-related technologies. 
  • Fidelity Metaverse ETF (FMET): This ETF is designed to track performance of the Fidelity Metaverse Index, which consists of a global universe of companies that develop, manufacture, distribute or sell products or services related to establishing and enabling the metaverse. 
  • Fount Metaverse ETF (MTVR): This ETF invests globally in stocks of companies operating across the development, manufacturing, distribution, or selling products or services related to metaverse technology. 
  • Proshares Metaverse ETF (VERS): This ETF tracks an index of stocks, spanning a broad range of industries globally, that are positioned to benefit from the development and use of the metaverse. Stocks are selected based on the amount of exposure to the related theme and weighted based on a modified equal-weight strategy. 
  • Global X Metaverse ETF (VR): This ETF tracks a market-cap-weighted index of 40 global companies that derive revenue from or have primary business operations associated with the metaverse. 

It's important to note that these ETFs hold a diverse range of companies, and not all of their holdings may be directly related to the metaverse. Investors should do their own research and consider their investment objectives before investing in any ETF. 

What Are the Benefits and Risks of Investing in Metaverse ETFs? 

Investing in metaverse ETFs can provide multiple benefits, such as exposure to an emerging industry and potential for high returns. However, investors should also familiarize themselves with the potential risks before buying shares. 

Benefits of Investing in Metaverse ETFs 

Investing in metaverse ETFs can offer several benefits, including: 

  • Diversification: Metaverse ETFs can provide investors with exposure to a diverse range of companies involved in the metaverse industry. This can help to reduce risk by spreading investments across multiple companies and sectors. 
  • Convenience: Investing in a metaverse ETF can be a convenient way for investors to gain exposure to the metaverse industry without having to conduct extensive research or invest in individual stocks. 
  • Exposure to an emerging industry: The metaverse industry is still in its early stages, and it is expected to grow significantly in the coming years. Investing in a metaverse ETF can offer exposure to an emerging industry that has the potential for significant growth. 
  • Potential for high returns: Investing in an emerging industry can be risky, but it also has the potential for high returns. The metaverse industry is expected to be a significant driver of growth in the technology sector, and investing in a metaverse ETF can offer exposure to this growth potential. 

Risks of Investing in Metaverse ETFs 

Investing in metaverse ETFs comes with several risks, including: 

  • Volatility: The metaverse industry is still in its early stages, and as such, companies involved in this industry may be more volatile than established companies. This volatility can result in significant price fluctuations for metaverse ETFs. 
  • Lack of liquidity: Some metaverse ETFs may be relatively new, which can result in low trading volumes and limited liquidity. This can make it difficult for investors to buy and sell shares of the ETF, which can increase the risk of losses. 
  • Competition: The metaverse industry is expected to be highly competitive, with many companies vying for market share. This competition can result in pricing pressures and lower profit margins for companies involved in the industry, which can impact the performance of metaverse ETFs. 
  • Regulatory risks: The metaverse industry is still developing, and regulatory authorities may impose new regulations that could impact the industry and the companies involved in it. This regulatory risk can impact the performance of metaverse ETFs. 
  • Technological risks: The metaverse industry relies heavily on technology, and any issues with the technology used in the industry could impact the performance of companies involved in the industry and, in turn, the performance of metaverse ETFs. 

Bottom Line 

Metaverse ETFs can provide investors exposure to stocks of companies that are directly or indirectly involved with the development or use of technology associated with metaverse. It's important to note that investing in any industry, including the metaverse, comes with risks, and investors should do their own research and seek professional advice before making any investment decisions. 

Kent Thune is Research Lead for etf.com, focusing on educational content, thought leadership, content management and search engine optimization. Before joining etf.com, he wrote for numerous investment websites, including Seeking Alpha and Kiplinger. 

 

Kent holds a Master of Business Administration (MBA) degree and is a practicing Certified Financial Planner (CFP®) with 25 years of experience managing investments, guiding clients through some of the worst economic and market environments in U.S. history. He has also served as an adjunct professor, teaching classes for The College of Charleston and Trident Technical College on the topics of retirement planning, business finance, and entrepreneurship. 

 

Kent founded a registered investment advisory firm in 2006 and is based in Hilton Head Island, SC, where he lives with his wife and two sons. Outside of work, Kent enjoys spending time with his family, playing guitar, and working on his philosophy book, which he plans to publish in the coming year.