CSOP launches Hong Kong’s first Metaverse ETF

CSOP Asset Management has launched the first ‘Metaverse’ thematic equity ETF in Hong Kong.

Listed on the Stock Exchange of Hong Kong, the CSOP Metaverse Concept ETF (3034 HK) adopts an actively managed approach to the Metaverse investment theme.

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.

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.

Melody He, Deputy CEO at CSOP Asset Management, said: “The Metaverse represents the beginning of a brand new era in which a parallel new world will be created. As the latest and one of the most important members of our thematic ETF series, the CSOP Metaverse Concept ETF is our bold attempt at something new and futuristic, providing our investors with state-of-the-art investment opportunities. We are optimistic about future thematic investments and firmly believe that adding the CSOP Metaverse Concept ETF to our product line will further fulfill all of our investors’ investment needs.”

Investment approach

The ETF selects its constituents from an initial universe of US-listed stocks, including American Depository Receipts, with market capitalizations above $1bn.

The fund aims to diversify across companies classified to four Metaverse-related business categories: infrastructure, engineering, application, and content.

The infrastructure category captures network providers, data center operators, and companies developing logic semiconductors, servers, and devices such as headsets that are used to interact with the Metaverse.

The engineering category captures companies developing technologies related to visualization, synchronization, communication, and data collection & analysis within the Metaverse.

The application category captures companies developing 3D real estate within the Metaverse as well as firms offering certain virtual services such as conferencing, classrooms, and digital payments.

Finally, the content category captures companies developing Metaverse-related content such as games and journeys, as well as firms distributing such content through video and live streaming services.

As of 21 February, the ETF contained 46 holdings. Stocks from the information technology and communication services sectors dominated with weights of 53.6% and 36.6%, respectively, while most of the remaining weight was allocated to consumer discretionary stocks at 7.4%.

Notable individual stock positions included Meta Platforms (6.3%), Nvidia (5.9%), Unity Software (5.8%), Apple (5.8%), Roblox (5.7%), Advanced Micro Devices (5.6%), Snap (5.5%), Qualcomm (5.4%), Sony (5.3%), and Tencent (5.0%).

The ETF comes with a management fee of 0.99% and estimated ongoing charges over a year of 2.00%.