Duelling metaverse ETFS start trading in Canada

Strategies will differ

Metaverse ETFS hit Canadian markets for the first time Monday as both Toronto-based Horzions ETFS and Evolve ETFS launched funds tracking companies involved in the space.

The Horizons Global Metaverse Index ETF (MTAV) will target a number of segments that overlap with the metaverse, including: augmented and virtual reality; the creator economy, in which companies provide platforms for individuals to create and share content; digital infrastructure; gaming; and digital payments.

Some of the companies you can expect to find on the index include Meta (formerly Facebook), Snap, Adobe and digital infrastructure leaders such as Microsoft and Oracle.

Steve Hawkins, president and chief executive officer, said that while companies like Meta brought the metaverse to the zeitgeist, the portfolio will cast a wider net of companies with the metaverse space.

“All of these companies, from our perspective, are impacted by the metaverse in a positive way and will benefit or profit from the expansion of the metaverse as it moves forward,” Hawkins told the Financial Post.

Hawkins added that the companies in the portfolio were identified by artificial intelligence (AI) as having mentioned the metaverse as part of their business strategy.

Evolve is taking a different approach with its Evolve Metaverse ETF (MESH). Raj Lala, president and chief executive of Evolve, described an actively managed strategy where the company picks a few key areas and finds companies within them, seeking out names like Meta, Microsoft and the virtual reality real estate modeller Matterport.

“We decided we were going to take an active approach and identify the right types of companies that are going to be involved in the specific areas of the metaverse, whether it be the (VR and AR) hardware manufacturers … whether they be some of the software developments, the platforms, things like that,” Lala said.

The metaverse is a virtual space that users can log into and interact with one another and experience events like NFT art galleries and concerts.

Lala sees the metaverse as a space that will grow beyond gaming, which is what many people associate the technology with today. He described other potential uses, such as an education tool or a fitness support (where a user can spar against a virtual partner while wearing a headset).

Other leaders in the industry share his optimism: U.S. digital investment giant Grayscale stated that the metaverse could represent a more than Us$1-trillion annual market opportunity in a report released on Thursday. The company sees revenue from the gaming portion of the metaverse market growing to US$400 billion in 2025 from US$180 billion in 2020.

Both Hawkins and Lala said that their ETFS would likely attract individual retail investors who gravitate towards themed ETFS.

While some investors admit have trouble grasping the concept of the metaverse and skeptics remain, Lala said companies that missed out on the rise of the Internet will not make that mistake again.

“(What’s) really important to note is that it is really the early days in understanding you know what the metaverse is, and you can tell it’s early days because so many people have different definitions of what the metaverse is and what it represents,” Lala said, adding that many are stuck viewing it in a one-dimensional way.

“We need to make sure we have always stay relevant in this world, and the only way to stay relevant is to be looking closer at metaverse space technologies and encompassing it within our business,” he said.