Horizons ETFs and Evolve ETFs have launched Canada’s first ‘Metaverse’ thematic equity ETFs.
The metaverse is a hypothesized iteration of the internet, supporting persistent online 3D virtual environments.
The Horizons Global Metaverse Index ETF (MTAV CN) and Evolve Metaverse ETF (MESH CN) are listed on Toronto Stock Exchange.
MTAV provides index-linked exposure to the metaverse investment theme, while MESH deploys an actively managed approach.
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, fitness.
Bloomberg Intelligence believes the market opportunity for the metaverse can reach $800 billion by 2024, while disruptive-innovation investment specialists ARK Invest estimates that revenue from virtual worlds could hit $400bn by 2025, up from approximately $180bn in 2021.
Steve Hawkins, President and CEO of Horizons ETFs, said: “The Metaverse is the next frontier of the human experience and technological innovation. We believe that the metaverse will become an extremely important realm for social and economic interaction over the next decade. Even today, these technologies are already reframing the way that we engage with one another, from virtual reality to non-fungible tokens. MTAV is the first index-based ETF in Canada to offer direct exposure to the global companies that are investing heavily in building and expanding the digital worlds that encompass the Metaverse.”
Raj Lala, President and CEO at Evolve ETFs, said: “In the 1990s many thought the internet was just a fad. Today, the internet touches almost every aspect of our lives. The metaverse will take us from simply interacting online to fully immersing within the digital world. As a leader in disruptive innovation, we decided to take an active approach to Canada’s first Metaverse ETF. MESH will allow us to be nimble and invest in companies well-positioned to capitalize on the future growth of the industry.”
Horizons Global Metaverse Index ETF
The Horizons Global Metaverse Index ETF tracks the Solactive Global Metaverse Index which selects its constituents from a universe of developed market stocks with market capitalizations above $1bn and average daily trading volumes greater than $2 million.
Security selection is driven by Solactive’s proprietary natural language processing algorithm, called ARTIS, which identifies firms linked to a specific theme by screening publicly available information such as financial news, business profiles, and company publications for appropriate keywords.
With reference to the metaverse, the algorithm is programmed to identify companies with business operations linked to six related industries: digital infrastructure, digital marketplaces, digital payments, augmented & virtual reality, the creator economy (platforms that allow individual creators to create, share, and transact directly with consumers), and online gaming & eSports.
The index selects 72 stocks, targeting the 12 companies with the highest ARTIS thematic relevance scores from each of the six industries.
Within this group, the index then selects the largest 50 companies and weights them by float-adjusted market capitalization subject to a single stock cap of 5%. Reconstitution and rebalancing occur quarterly.
The ETF comes with a management fee of 0.55%.
Evolve Metaverse ETF
The Evolve Metaverse ETF also invests in developed market firms that are generally situated within the large and mid-cap size segments.
According to the prospectus, the fund targets companies supporting persistent 3D virtual environments combined with social media, communications, and productivity tools that allow users to interact online in an immersive, virtual representation of the real world.
Security selection is driven by Evolve’s proprietary process that combines quantitative techniques, fundamental analysis, and portfolio risk management.
The ETF comes with a management fee of 0.60%.