The metaverse looks set to emerge as a fast-growing trend in the European fund sector as virtual reality and the next iteration of the internet take off, according to the latest issue of The Cerulli Edge—European Monthly Product Trends.
The metaverse is the fastest-growing sub-theme in terms of number of funds launched, according to the firm, with Quantology launching the first metaverse UCITS fund in Europe in June 2021 and last year several large fund providers launching such funds of their own.
Around a dozen open-end funds and ETFs are targeting the metaverse in Europe, with combined assets under management (AUM) of USD98 million as of January 2023, according to Cerulli Associates, with total AUM exceeding USD100 million in November last year.
Globally, there were 59 metaverse funds as of December 2022, including 35 sub-theme metaverse ETFs. In Europe, some of the biggest ETF providers, including Fidelity, Franklin Templeton, and Legal & General launched funds in 2022, Cerulli says. Most recently, iShares, launched its ETF in December 2022.
“Providers are looking to position themselves for what is expected to be the next big trend,” says Fabrizio Zumbo, director.
However, the AUM of European metaverse funds remains low globally. This could be partly because retail investors seem reluctant to enter the market, possibly after suffering disappointments with crypto and blockchain-related investments. “We see some managers adopting a wait-and-see approach in this domain in a bid to better identify the best new ideas that could attract investors’ interest and to avoid running the risk of reputational damage given the recent troubles experienced in the crypto space,” says Zumbo.
Environmental, social, and governance may provide a spur, the firm says, commenting that it is an important theme among some of the new metaverse funds, with several of the larger players noting that their products comply with Article 8 of the EU’s Sustainable Finance Directive Regulation.