More private investment is pouring into the nascent but potentially explosive metaverse, according to a report from consulting firm McKinsey & Company. This should be of benefit to exchange traded funds (ETFs) that target the metaverse and its underlying technologies.
“It’s not just talk; private capital is also rapidly pouring in. In 2021, metaverse-related companies reportedly raised upward of $10 billion, more than twice as much as they did in the previous year,” the report said.
Gaming companies in particular are also looking to leverage the metaverse to enhance their user experiences. It offers an exciting growth opportunity for investors looking for avenues of investment in areas with the potential for long-term gains.
“In the past 12 months, one company alone—Epic Games, maker of Fortnite—has not only raised $3 billion to fund its long-term vision for the metaverse but also announced a partnership with LEGO to build a metaverse for kids,” the report said. “The global value creation opportunity from the metaverse could be in the trillions.”
A Metaverse Opportunity in the ETF Universe
ETF investors salivating at the potential can look to the Global X Metaverse ETF (VR). Per its fund description, VR seeks to invest in companies that are positioned to benefit from the development and commercialization of the metaverse.
Companies included in the fund are those involved in the development of hardware and software that allows users to experience extended digital realities; creator platforms, where live streaming and other media content is shared in 3D simulations; and creator economies, involving the development of applications involving digital payments, such as the creation and distribution of non-fungible tokens (NFTs) and other digital asset payment gateways. Companies also include those involved in the digital infrastructure/hardware space, such as semiconductors, cloud computing technology, and 5G infrastructure supporting digital media consumption.
Highlights of VR:
- High growth potential: The global metaverse market is expected to increase more than 50% from 2021 to 2022, exceeding $100 billion. Forecasts suggest it could surpass $1.5 trillion by 2029, highlighting the substantial room for growth.
- Expanding horizons: While early conceptions of the metaverse were centered on gaming and other forms of entertainment, there are emerging use cases for shopping and even hybrid work, suggesting that we may be just scratching the surface of potential applications.
- Unconstrained approach: The metaverse is supported by an intricate network of hardware and software providers, creators, and collaborators. VR invests accordingly, targeting companies regardless of sector or geographic categorization.
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