CSOP AM launches metaverse ETF in Hong Kong

CSOP Asset Management has become the latest fund house to launch an exchange traded product targeting the metaverse investment theme.

The CSOP Metaverse Concept ETF, Hong Kong’s first metaverse-focused fund, will invest mainly in US-listed companies that are directly or indirectly involved in technology that backs products or services that will aid the development of the augmented reality of the metaverse. Meta Platforms, the newly rebranded parent company of Facebook and Instagram, was its largest holding, at 6.38 per cent at its launch on Monday.

Facebook rebranded as Meta in October 2021 in a bid to reflect a new focus on the building of the metaverse as a digital extension of its social media platform. The move has raised global investor interest in the development of the metaverse.

Meta has seen its share price plunge this month after Facebook reported its first fall in 18 years of daily active user numbers. Nevertheless, CSOP AM, along with many other asset managers in Asia, is confident that the creation of the metaverse translates to a bona fide investment thematic that provides a long-term opportunity for investors.

“The metaverse represents the beginning of a brand new era, in which a parallel new world will be created,” said Melody He, deputy chief executive at CSOP AM.

“As the latest and one of the most important members of the CSOP thematic ETF series, CSOP Metaverse Concept ETF is our bold attempt at something new and futuristic, providing our investors with state of the art investment opportunities,” said He.

This article was previously published by Ignites Asia, a title owned by the FT Group.

According to CSOP, the metaverse “is best understood as the next iteration of the internet”, an industry into which technology giants “are investing massive resources”.

The asset manager said the global metaverse market was expected to grow from about $5mn in 2020 to $1.5tn in 2030.

According to the company, the back-tested CSOP Metaverse Concept Portfolio has risen 345 per cent since the start of 2019, more than twice as much as the tech-focused Nasdaq 100 Index, which has increased 149 per cent over the same period.

Other top holdings of the CSOP Metaverse Concept ETF include online gaming platform and developer Roblox, artificial intelligence group Ndivia, cross-platform gaming company Unity, Apple, Snap, Sony and Tencent.

The investment universe of the new ETF consists of the 46 most representative metaverse leaders in the US, which as of February 3 had a combined market capitalisation of $5.2tn, according to CSOP AM.

Other established tech giants have also recently thrown their hat into the metaverse ring. In January, Microsoft agreed to pay $75bn for games maker Activision Blizzard, the world’s biggest-ever technology acquisition, as a central pillar for the company’s step into the metaverse that will enable digital interaction via a major gaming platform.

“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” Satya Nadella, chair and chief executive officer of Microsoft, said following the acquisition.

CSOP AM highlights the need for using an active ETF strategy in order to adapt to what it calls a rapidly changing industry landscape that features new and emerging technologies.

The fund has an estimated ongoing charges figure of 2 per cent and launched with an initial investment of just $9mn.

In Asia, a craze for the metaverse has fuelled interest from investors in other markets, most notably in South Korea.

Last November, Bloomberg Intelligence described South Korea as “the fastest-growing metaverse ETF market globally”.

It was reported at the time that nearly all popular ETFs focusing on the metaverse are listed in Korea, the one exception being the US-listed Roundhill Ball Metaverse ETF.

As of January 19, there were eight metaverse ETFs in South Korea, which have attracted inflows of over $1bn, according to data from Samsung Asset Management.

Thailand’s first metaverse fund, the MFC Metaverse Equity, was launched by Bangkok-based MFC Asset Management in December last year.

The fund invests at least 80 per cent of its net asset value in the Roundhill Ball Metaverse ETF.

*Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at ignitesasia.com.

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