For the moment, metaverse investing may well be out of favor by virtue of the fact that metaverse equities are growth stocks and markets are punishing growth names.
Rising interest rates and high inflation will do that, but for investors interested in the metaverse, there are some important points to remember. First, this is a disruptive theme that’s only scratching the surface of what could be a compelling growth trajectory.
Second, related to the first point, metaverse investing will likely require a long-term point of view. The Fidelity Metaverse ETF (FMET) helps investors position for long-term metaverse trends while avoiding the stock picking burden.
While FMET and other metaverse exchange traded funds are struggling this year, one of the positives for investors to consider is that interest in metaverse investing is rising.
“Interest is piquing for good reason. The metaverse is an immersive virtual world built on established gaming, virtual reality (VR) and augmented reality (AR) elements. At this juncture, it is much like the internet of the early 1990s or the smartphone of the early 2000s: We expect it is going to be big, and very likely change people’s daily lives,” according to BlackRock research.
FMET, which tracks the Fidelity Metaverse Index, offers investors exposure to rising metaverse themes such as increasing digitization and connectivity, cryptocurrency opportunities, and surging computing power. In fact, those themes and others are already taking shape.
“Those who already spend time in virtual spaces are using old technology where the screen is the limiting factor. VR headsets and AR glasses, along with powerful 5G mobile networks, will take this to the next level,” added BlackRock. “We could see a breakthrough in AR glasses ― a version light and smart enough to be worn every day ― as soon as 2023. VR headsets will modernize as well but are less likely to be the ‘game changer’ given they are not as easily worn on the move.”
Of course, what’s under FMET’s hood is meaningful for long-term investors, and those market participants should peruse the ETF’s roster because they’re likely to find plenty of names relevant to multiple metaverse concepts.
“Where to look for prospective metaverse investment gains? We see the most immediate opportunity in those companies that can supply the big internet, software and smartphone companies with the ingredients they need to develop glasses and headsets. Producing AR glasses that are wearable, fashionable and metaverse-functional will require a new generation of chips, batteries and lenses,” concluded BlackRock.
FMET’s top 10 holdings include Meta Platforms (NASDAQ:FB), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG), and Nvidia (NASDAQ:NVDA).
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
