With growth stocks struggling, now could be an ideal time for risk-tolerant investors to evaluate the opportunity-rich metaverse investment thesis.
For those who want to eschew picking individual metaverse stocks, exchange traded funds are an appropriate point of access for this theme. That group includes the Fidelity Metaverse ETF (FMET). FMET is two months old and follows the Fidelity Metaverse NR USD Index.
The rookie Fidelity ETF could ultimately prove to be at the right place at the right time because there’s no denying that the metaverse as an investment concept is buoyed by some alluring growth projections.
“Large technology companies, venture capital (VC), private equity (PE), start-ups, and established brands are seeking to capitalize on the metaverse opportunity. Corporations, VC, and PE have already invested more than $120 billion in the metaverse in the first five months of 2022, more than double the $57 billion invested in all of 2021, a large part of it is driven by Microsoft’s planned acquisition of Activision for $69 billion,” according to McKinsey.
Video game giant Activision (NASDAQ:ATVI) is a top-10 holding in FMET. That’s just one example of the fund’s large-cap exposure, which is relevant because, as McKinsey notes, large- and mega-cap technology companies are the biggest metaverse investors. FMET answers that bell with exposure to Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOG), and Apple (NASDAQ:AAPL), among others.
What’s alluring about the metaverse investment thesis is that it’s supported by multiple factors, indicating it has multiple potential catalysts.
“Multiple factors are driving this investor enthusiasm, including ongoing technological advances across the infrastructure required to run the metaverse; demographic tailwinds; increasingly consumer-led brand marketing and engagement; and increasing marketplace readiness as users explore today’s early version of the metaverse largely driven by gaming (with some games boasting tens of millions of active players) with applications emerging that span socializing, fitness, commerce, virtual learning, and others,” added McKinsey.
FMET is home to 60 stocks, giving it notable depth among thematic ETFs, and that depth is important due to the sheer expanse of metaverse’s potential. As McKiney points out, the metaverse could impact e-commerce to the tune of trillions of dollars, while other industries such as advertising, gaming, and online learning could be affected by hundreds of billions of dollars. Those are staggering forecasts and, if accurate, could highlight long-term allure with FMET.
“The metaverse is at an inflection point in its development, just as the social networks and user-generated content driving the transition to Web 2.0 in 2004 sparked utopian visions of consumer control and the democratization of the internet,” said the consulting firm.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.