Fidelity launches metaverse ETF in Canada

Fidelity Investments has launched a new thematic equity ETF in Canada providing exposure to companies that are developing and enabling the metaverse.

The Fidelity Total Metaverse Index ETF (FMTV CN) has been listed on NEO Exchange with a management fee 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.

Commenting on the launch, Kelly Creelman, Senior Vice President for Products and Marketing at Fidelity Investments Canada, said: “At Fidelity, we are proud to offer financial advisors and investors innovative investment strategies that aim to grow their wealth over the long-term, and the metaverse is yet another prime example.

“Leveraging Fidelity’s trusted investment expertise, vast global network, and research capabilities, the Fidelity Total Metaverse Index ETF will expand Fidelity’s thematic investing line-up and offer investors access to companies that may revolutionize the digital world.”

Methodology

The fund is linked to the Fidelity Canada Total Metaverse Index which selects its constituents from a universe of developed and emerging market stocks with market capitalizations above $250m and average daily trading volumes greater than $1.25m.

The methodology screens for companies deriving more than 50% of their revenue from metaverse-related industries such as computing hardware and components, digital infrastructure, design and engineering software, gaming technology and software, web development and content services, and smartphone and wearable technologies.

Additionally, the index also includes firms with greater than 50% revenue exposure to digital payments and crypto industry activities.

Companies in the screened universe are then assigned thematic relevance scores based on a combination of three metrics: total revenue derived from eligible industries; percentage of revenue derived from eligible industries; and a natural language processing metric that reflects how often keywords related to the metaverse are found in company statements.

The index aims to include 50 metaverse-related companies as well as 50 firms from the digital payments and crypto industry category. Constituents are weighted by the cubed root of their market capitalizations while capping the weight of any single stock at 4.5% and the combined weight of companies from the digital payments and crypto industry category at 15%.