Metavers: Several Investment Options in Canada

(Photo: 123RF)

The meta-universe industry is relatively nascent, and Canada has few investment options. Because the world leaders in this sector are in the United States or elsewhere in the world, some Canadian exchange-traded funds (ETFs) allow the use of baskets of international securities.

The two “oldest” are the Horizons Global Metaverse Index ETF (MTAV, $ 17.83) and the Evolve Metaverse ETF (MESH, $ 6.33). In May, two more appeared on the Canadian markets: the Fidelity Total Metavers Index ETF (FMTV, $ 10.27) and the CI Galaxy Metavers ETF (CMVX, $ 20.00).

“Investing in a Canadian ETF in the meta-universe allows investors to avoid currency conversion problems and greatly simplifies filing tax returns,” said Caitlin Thomson, Evolve’s vice president of product strategy.

Evolve is also the only issuer to have chosen to actively manage its ETF for the metaverse, while the other three are copying benchmarks.

“We believe that the metaverse is still too new a concept to rely on as an index that can put companies in the wrong categories,” she said. The Evolve ETF offers a basket of 28 high-cap stocks, mostly from the US (75.6%) and China (13.5%).

According to her, companies should be divided into three categories: those that create virtual environments, such as Meta Platforms (META, US $ 195.65), Microsoft (MSFT, US $ 272.50), Roblox (RBLX, US $ 31.44). ) and Activision Blizzard (ATVI). , $ 78.03 ), Those who develop software to create tools for creating a metaverse, such as Autodesk (ADSK, $ 207.17) and Unity Software (U, $ 44.32), as well as those who develop equipment for the use of virtual and augmented reality, another category where meta-platforms stand out.

Caitlin Thomson explains that after choosing companies to help create a metaworld, Evolve chooses to manage its portfolio based on indexes, rebalancing all stocks to the same weight at the end of each quarter.

At Horizons, we have chosen passive management related to the Solactive Global Metaverse index, which includes 50 companies with a maximum weight of 5% on the security and automatic rebalancing at the end of each quarter.

“The index seeks global reach and wants to identify today’s and tomorrow’s leaders in the meta-universe through machine learning. We currently have a large position in the US market (78.1%). If that’s where we find leaders, that’s where we’re going to invest. In two or three years, the portrait may change, ”explains Marie-Chantal Lozon, senior vice president of business development at Horizons Canada.

The latter argues that Horizons is aimed at investors who are betting on the long term and can tolerate the inherent volatility of the stock market by having ETFs in the metaverse. “We are specifically aimed at those who believe that the metaverse will disrupt technology in our daily lives,” she said.

The CI Galaxy ETF tracks the performance of the Alerian Galaxy Immersive Digital Worlds Hedged to Canadian Dollars Index, while the Fidelity ETF seeks to track the overall Fidelity Canada Metavers index. The last two are too recent to provide complete information on the selection of their shares.

A topic with great potential, but…

“The metaworld is a very macroeconomic subject that will determine how people will interact with the Internet in the future. This is a huge investment thesis, but it is still unknown when and to what extent this phenomenon will unfold, “- said the chief strategist and senior economist at iA Financial Group Sebastian McMahon.

According to him, the metaworld will develop slowly and steadily until a very popular program is released, which will encourage early users to make the leap. “Remember the launch of Apple’s iPhone (AAPL, $ 148.80) in 2007. It was programs like Angry Birds that were in demand because a lot of people wanted to play. In the future, there will be such a program in the metaworld, and it will take off, “he said.

Sebastian McMahon believes that the entertainment industry will lead the parade, especially the world of exciting games, without neglecting the fashion industry. He believes that there is a market for virtual worlds, where, for example, you can create an avatar and pay for special virtual designer clothes.

Caitlin Thomson also argues that the video game industry will be a major component of the metaverse, but this technology can destroy many industries, such as education: “Now students are reading books in history lessons. But what if they could wear a virtual reality helmet to transport themselves to different times to visit, for example, the pyramids of Egypt? The experience in the classroom would be completely different, ”she says.

She also believes that technology can change, in particular, the way online concerts are held, as well as visiting virtual homes.

Focus on those who help create metapoems

Sebastian McMahon, Chief Strategist and Senior Economist, iA Financial Group (Photo: courtesy)

“The definition of the metaverse is not yet established. We are not yet investing in the metaworld. We invest in companies that contribute to the creation of the metacospace or that will be well positioned when it appears. But the interesting part of the curve does not yet exist.