On June 30, Roundhill Investments, the issuer behind thematic tech funds like the Roundhill Sports Betting & iGaming ETF (BETZ) and the Roundhill Streaming Services & Technology ETF (SUBZ), launched an ETF designed to capitalize on the emergence of persistent virtual worlds and economies.
The new ETF, the Roundhill Ball Metaverse ETF (META), tracks companies involved in the “Metaverse,” which is a concept of a next-gen Internet that’s persistent, interoperable, synchronous, and open to everyone, with its own fully functioning economy and both virtual and real-world experiences. Think online worlds and social networks that blend reality with virtual reality.
The Metaverse is a “successor-state to today’s mobile Internet,” according to the press release announcing the ETF launch, one that integrates and links countless persistent virtual worlds, but also is integrated into the physical world as well, “thereby creating a new medium and economy for work, leisure, and innovation.”
Bloomberg Intelligence believes the market opportunity for the Metaverse can reach $800 billion by 2025, according to Roundhill’s fund page.
Inside META’s Portfolio
The ETF tracks the global Ball Metaverse Index, a benchmark designed by Matthew Ball, an investor, researcher, and expert council for a variety of high-profile names, including Amazon, NVIDIA, Tinder, Spotify, and others.
“We consider the emergence of the Metaverse to be as transformative and valuable as the emergence of mobile Internet and the fixed-line Internet that preceded it,” said Ball in the press release. “It likely will touch every industry and profession, enlarging and/or disrupting today’s leaders, and leading to countless new companies and technologies.”
META’s benchmark tracks a tiered-weight portfolio of stocks involved in one or more of the following:
- Computation: Supply and enable computing power to the Metaverse.
- Networking: Provide real-time connections, high bandwidth, and data services to consumers.
- Virtual Platforms: Develop and operate immersive digital worlds where users can explore, create, and socialize.
- Interchange Standards: Build tools, protocols, formats, services, and engines for interoperability, allowing for creation, operation, and upgrades to the Metaverse.
- Payments: Support digital payment processes and operations.
- Content, Assets, and Identity Services: Design/create, sell/resell, store, manage, or secure various digital assets, such as virtual goods or currencies connected to user data and identity.
- Hardware: Sell and support physical devices used to access and interact with the Metaverse.
Once selected, stocks are ranked by whether they are pure-play companies, core companies, or non-core companies. Pure-play companies receive the highest weight in the index, with a weighting that’s 2.5 times larger than that allocated to core companies. In turn, core companies have twice the collective weight as non-core companies. Categories are capped at 25%, and single company weightings are capped at 8%.
The index rebalances quarterly.
As of June 30, META’s top three positions included Nvidia (NVDA), at 7.92%; Tencent Holdings at 5.90%; and Roblox Corp, at 5.13%.
The Ball Metaverse Index is maintained by an expert council, including Jerry Heinz, VP of engineering for cybersecurity start-up ActZero (with former roles at Nvidia, Tinder, and Amazon Web services, where he launched the company’s slow-latency streaming app and game virtualization platform); Jacob Navok, co-founder of streaming platform Genvid Technologies and former head of SquareEnix’s cloudgaming division; Jesse Walden, managing partner of Variant Fund and former general partner of Andreessen Horowitz’s crypto fund and Spotify-acquired MediachainLabs; and Jonathan Glick, former SVP at the New York Times.
The fund has an expense ratio of 0.75% and is listed on NYSE Arca.
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