BlackRock has launched a new ETF, giving European clients targeted exposure to a wide variety of companies active in developing metaverse technologies. The iShares Metaverse UCITS ETF [MTAV] will track the STOXX Global Metaverse Index.
BlackRock writes that the metaverse, an immersive virtual world integrating digital and physical interactions, is the next frontier of the digital world and stands to benefit from an acceleration in investments from large technology companies, private markets, and consumer brands as new virtual applications emerge. Metaverse technology constitutes an interplay between aspects of both Augmented Reality (the integration of digital information with the user’s environment in real time) and Virtual Reality (the computer-generated simulation of a three-dimensional image or environment that can be interacted with).
The metaverse technology marketplace is developing at a rapid pace, with an expected value of USD800mn by 2025, with an expected market size of USD4-5T by 2030. The desire to capitalise on this space is growing, as seen in March 2022, when metaverse-themed global exchange traded products hit USD2bn AUM globally.
Omar Moufti, product strategist for thematic and sector ETFs at BlackRock, says: “We see the metaverse as the next leap forward in global communication and connectivity. It has the potential to revolutionise many sectors and processes, and reshape every facet of society, from the way we work, consume, interact, and produce. As further uses for metaverse technologies become apparent, the desire for exposure to the technology companies behind these innovations grows. The iShares Metaverse UCITS ETF gives investors access to a diversified portfolio of companies active in building the metaverse and applying it in their fields.”
The iShares Metaverse UCITS ETF tracks the STOXX Global Metaverse Index which takes a new approach to thematic investing by leveraging patent data to identify market leaders, innovators, and specialists in the space. Companies are included based on the quality of their innovation activity through an assessment of the patents they file.
The filing and publication of patents in a specific technology indicates a company’s research focus and future direction of activity before revenues are able to capture the full opportunity set of emerging technologies.
The firm writes that by leveraging EconSight’s patent data, the STOXX Global Metaverse Index relies on a robust methodology to select only the top 10 per cent of companies with High Quality Patents (HQP) within metaverse technologies. The index comprises 65 global companies ranging from the digital marketplace, gaming, healthcare, manufacturing, software as well as hardware and components. This incorporates companies developing interactive virtual platforms, wearables, and immersive technologies as well as those companies providing the necessary computer processing capabilities and infrastructure.
Once the patents related to the metaverse have been identified, the selection of companies can be done in two different ways: assessing the number of High Quality Patents and specialisation scores. A specialisation score indicates the importance of the overall technology suite to a company’s business.
Axel Lomholt, Chief Product Officer, Indices and Benchmarks at Qontigo says: “The STOXX Global Metaverse Index complements our suite of Qontigo thematic strategies focusing on transformative technologies in a world which is digitalising at a rapid speed. We are applying innovative patents-based methodology that enables us to identify the pioneering companies developing the Metaverse.”
In addition, the index incorporates ESG screening criteria. Companies that are not compliant with the Sustainalytics Global Standards Screening (GSS) assessment or are involved in controversial weapons are excluded from the investment universe. The following series of business involvement screens is also applied: Weapons, Tobacco, Nuclear Power, Conventional and Unconventional Oil & Gas, Thermal Coal. MTAV is classified as Article 8 under the European Union’s Sustainable Financial Disclosure Regulation (SFDR).
The Fund is listed on Euronext, with a total expense ratio (TER) of 0.50 per cent.