Metaverse? Buzz? How to Invest to Follow Hot Market Concepts

December 13, 2021 | Author:Bullseye Financial |Tagged:

Recently, the increasingly popular concept of “Metaverse” is embraced by investors. In this issue, we will introduce two “alternative ETFs” for investors who wish to follow hot market spots but do not know which companies are participating in this track due to limitations of their own expertise and knowledge. Some of them do so based on their focus on certain concepts on the market, and others based on some special strategies.

 

ETF investing has already been a mature concept. We also introduced many times what ETF products are and how to screen ETFs in our previous videos. Typically, ETF is a product designed to track changes in certain indexes or asset prices, including the well-known SPY and VOO, which track the S&P 500, and GLD, which tracks the performance of gold. Furthermore, some investors also like to invest in ETFs that focus on certain industries, such as SOXX in the semiconductor industry. In fact, the design strategy of ETF is not limited to this. To meet the needs of different investors, issuers also provide investors with a package stock from ETFs guided by the concepts favoured by market and money.

 

For example, the increasingly popular concept of “Metaverse” in recent times. Metaverse is an idea that relies on such technologies as VR and AI to gradually integrate the virtual and the real. In the future of Metaverse, by wearing augmented reality equipment, people will live, learn and entertain in the virtual world from terminals. This interaction, with the help of technology and software, will bring a high degree of immersion to experiencers. The virtual world will also have its own rules, order and currency. Facebook, one of FAANG Stocks, recently announced that it would change its name to Meta and push particularly hard into Metaverse.

 

As investors, you might have heard a lot of discussion about Metaverse and are excited about the disruptive innovation this concept could bring, but you don’t know which companies are participating in this. Then, you can search for some ETFs based on this concept. Let’s take a recently popular ETF with the stock code being META as an example:

 

META Roundhill Ball Metaverse ETF
Company name Proportion
NVIDIA 9.0%
Microsoft 7.4%
Roblox 7.1%
Meta Platforms (original Facebook) 6.0%
Unity Software 5.2%

 

It can be seen that the top 5 positions of this ETF include companies that will contribute to the concept of Metaverse in many ways: NVIDIA, Microsoft and Meta focus on chips, big data and other infrastructure to build the Metaverse; Roblox is building the virtual world step by step starting from online games, so it is called “the first stock of the Metaverse”; Unity is the platform for creating and operating interactive real-time 3D content. The Unity platform is used by game developers, artists, architects, designers, film producers and other creators from all walks of life throughout the world.

 

Next, I’ll introduce another type of ETFs based on some special strategies. Take the following ETF as an example. It is an ETF that tracks the BUZZ Index of next generation of AI leaders in USA, which is designed to track the hottest, most talked about, and most bullish stocks rated by investors in the market. In sort, BUZZ is an index that tracks market sentiment. It collects data by analyzing online resources such as social media, new and blog posts.

 

Let’s look at the positions of this ETF. It is not hard to find that the most talked-about stocks of the moment — Tesla, AMD and GME are in its top five positions. Such ETFs are suitable for investors who like momentum trading, chasing market focus.

 

BUZZ VanEck Vectors Social Sentiment ETF
Company name Proportion
Tesla 4.1%
Advanced Micro Devices 3.2%
GameStop Corporation 3.2%
Blackberry 3.1%
Plug Power, Inc. 3.0%

 

Author: Dr.Wei Shi (CIO of Bullseye Financial Ltd, CFA)