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The metaverse may be the receptacle for our dreams of the future, but you can invest in it now.
Some savvy metaverse visionaries and Roundhill Investments have registered a Metaverse ETF. It’s an exchange-traded fund (ETF), or a basket of securities that trade on an exchange, just like a stock. This particular ETF lets people invest in a bunch of the companies that are either already making the metaverse happen or are positioned to do so in the future.
As GamesBeat readers may have memorized by now, the metaverse is the universe of virtual worlds that are all interconnected, like in novels such as Snow Crash and Ready Player One. And the Metaverse ETF has been created by Matthew Ball, a futurist and investor, and a number of other visionaries such as Jacob Navok, CEO of Genvid Technologies. They claim they have done the hard work researching the metaverse so you don’t have to, and in doing so, they’re espousing the notion that the metaverse can democratize everything. In this case, they’re democratizing investments in the metaverse by creating an ETF that anybody can invest in and reap the benefits of the metaverse.
Bloomberg recently estimated the metaverse’s market size at $800 billion, and with this ETF, investors will know every day what the value of the metaverse is, even as it is in its formative stages. While the metaverse is the stuff of science fiction, it is possible to predict which companies are playing a fundamental role in making it come to pass.
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“An ETF pulls together a package by an index, a whole wide variety, or as many as you like, of different public company stocks,” Ball said. “The practicality for an investor is if they want exposure to a theme or category, but don’t have the expertise to pick all of the individual stocks, they can outsource that decision making to this index.”
The mechanics of the ETF
The New York-based Roundhill Investments is a registered investment adviser and ETF sponsor focused on developing innovative financial products, and it makes the Roundhill Metaverse ETF possible.
Roundhill Investments CEO Will Hershey said he is very excited to work with Ball and his team to offer a one-of-a-kind ETF that provides investors exposure to a basket of 50 companies that are collectively positioned to drive the future of the internet.
“The basic premise, in this case, is to be able to go to investors and say, ‘Here’s a thesis for the metaverse,” Ball added. “We believe it’s going to hit a wide variety of different categories. And we’ve produced a methodology that is attuned to both individual categories that will benefit from the metaverse and then weighted to those categories, and then applied to a map of the entire universe of public companies.”
Defining the metaverse
Ball said in an interview with GamesBeat that the metaverse has many definitions. But it is broadly understood as a successor-state to today’s mobile internet, but which will involve countless interoperable and persistent virtual worlds, be richly integrated into the physical world as well, thereby creating a new medium and economy for work, leisure, and innovation.
Navok and Ball said to me in an interview that the Roundhill Ball Metaverse ETF is designed to offer investors exposure to the metaverse by tracking, before fees and expenses, the performance of the Ball Metaverse Index (“META Index”). The META Index is managed by Ball Metaverse Research Partners, a newly-formed indexing and research firm led by Ball, a seasoned investor, adviser, and researcher of the metaverse.
Ball believes the emergence of the metaverse will be transformative and valuable as the emergence of mobile internet and the fixed-line internet that preceded it. He believes it will touch every industry and profession, enlarging and/or disrupting today’s leaders, and leading to countless new companies and technologies.
Regulations and details
The ETF requires approval from the Securities & Exchange Commission, and it will be sold on the New York Stock Exchange. Ball said the methodology is designed to be forward compatible, so if Epic Games goes public then it could be added as one of the stocks. But private companies aren’t part of the index.
“Companies like Tencent, Nvidia, Unity, Roblox, Alibaba, Sony, and others are all still very relevant, but then the key is the methodology is designed so that when you’re missing a company, let’s say Epic, it is able to manage for that because it’s not which companies are in there. It’s like the categories that they apply to,” Ball said.
It just means that in the game engine category, Unity picks up more of the slack because Epic Games isn’t public. Over time, the number of companies in the index will likely change. Each company is weighted in the index based on its importance and investment value. But the fund doesn’t exist purely to produce outstanding returns. It is meant to raise awareness of the metaverse opportunity.
The Expert Council creates the index and licenses it and the name to Roundhill, which is a securities provider and registered investment adviser.
The ultimate metaverse essay
In the meantime, Ball is working on a large essay on the metaverse that Ball, who has written numerous essays on the metaverse, has been working on for quite some time. It’s going to be about 26,000 words and tries to explain what the metaverse is.
“We are going to release this essay that maps to our methodology for the ETF and explains the criticality of all of these different categories in detail,” Ball said. “This is probably going to be the most detailed and certainly longest description of the metaverse I’ve ever seen. And that’s intended to educate and inform the market.”
The META Index should provide investors with an efficient and comprehensive way to invest across all of the major categories and areas of the Metaverse, and proportional to their likely share of revenues. Specifically, the META Index was developed and will be maintained by an “expert council” whose backgrounds and specialized knowledge reflects the range of relevant sectors.
“There’s a lot of hype. And there’s a lot of incorrect definitions. And there’s a lot of people who will utilize buzzwords and do not apply it properly,” Navok said. “We see what are incorrect assumptions, improper diagnoses, or incorrect predictions of the future. And since we have a very coherent and cohesive vision for how we want this to lay out, we thought to ourselves once and for all, let’s put out the thesis on the metaverse out.”
He added, “We put together a logical rubric for how we see that unfolding from an investment perspective, what companies will be successful, which ones have the best exposure to it. And in many ways, this is a response to demand that we’ve had things that we’ve been doing piecemeal over the last few years, where now we’re formalizing it in a way that makes it fully accessible. Not only is the essay public and free, but the index itself is shared in public and free. And if you wish to simply build your own portfolio, off of the index, all of the research, all of the work that this group has spent over the last year, in putting this together is available to the entire public.”
The arbiters of the metaverse
In addition to Ball and Navok Ball, the council includes:
- Jerry Heinz, the VP of engineering cybersecurity startup ActZero and the former head of enterprise cloud services at Nvidia; vice president of engineering at Tinder; and senior manager at Amazon Web Services; where he launched the company’s low-latency streaming, app and game virtualization platform.
- Jesse Walden, the managing partner of Variant Fund and the former general partner of Andreessen Horowitz’s crypto fund. He’s also the founder of Mediachain Labs, a blockchain-based rights platform that Spotify acquired.
- Jonathan Glick, the former senior vice president of product and technology at The New York Times Electronic Media Company and the director of research at GLG, the global expert network.
- Anna Sweet, the CEO of Bad Robot Games. She’s the former head of content and developer strategy at Facebook’s Oculus, and senior business development manager at Valve, where she led the growth of Steam and several key hardware initiatives.
- Imran Sarwar, the former director of design and co-producer for Grand Theft Auto V, Grand Theft Auto Online, Red Dead Redemption 2, Red Dead Redemption Online.
META holdings include a wide range of companies that are part of the building blocks of the metaverse. They include graphics processing unit (GPU) companies like Nvidia; virtual platform providers, like Tencent and Roblox; cloud computing services, like Fastly; and gaming engines like Unity. It also has content and app creators.
Part of the interesting discussion in deciding which stocks to include is all about defining the metaverse. Ball sees seven categories of companies in a kind of market map. These include:
- hardware, computing, networking, virtual platforms
- interchange tools and standards
- payment services
- content services and assets.
Bloomberg’s own estimate did not include relevant compute, networking, and payments services while the META ETF does.
“So hardware would be your VR headset compute with the Nvidia GPUs,” Ball said. “Networking would be the networking providers, virtual platforms, Minecraft, Fortnite, etc. Interchange standards would be your Unity runs and then you’re getting into payments.”
Roblox is part of the content assets, where games are included. Being included in the index could be good for the various companies, as it means investors will be putting money into their stocks and helping boost their valuations.
“We debate really intensely,” Navok said. “We spent a lot of time thinking about this. If you look at content that’s most poised to grow right now, like a company like Roblox, we consider it to be a virtual platform. It’s a user-generated content platform. It doesn’t fall under content. Traditionally, if you look at the majority of things that we would call content in the space, most of them are traditional video games. I wouldn’t refer to Call of Duty: Warzone as a metaverse quite yet. But if they were to connect Warzone to other products, that would be the growth of that category.”
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