The participant takes a selfie when experiencing “extreme 4D simulation” with exciting VR from SK telecom during the second day of the annual Mobile World Congress.
Matthias Esterle Corbis News | Getty Images
Metaverse exchange-traded funds are developing in South Korea when retail investors buy funds focused on new technology frontiers.
The metaworld in a broad sense refers to a virtual world where people interact through three-dimensional avatars. In the metaworld, users can participate in activities such as games, concerts or live sports using virtual reality headsets such as the Oculus.
South Korea’s metaverse universe ETFs were the first to be launched in Asia when the hype surrounding the new generation of the Internet increased last year. ETFs are a basket of stocks or bonds that widely track market indices and offer investors greater diversification.
According to Rahul Sen Sharma, managing partner of index provider Indxx, South Korea’s first four metaverses ETFs launched in October and raised $ 100 million in less than two weeks.
South Korea is not alone. Metaverse ETFs are also appearing in the US, and analysts have noted that more will be launched soon.
As of January 19, South Korea had eight meta-universed ETFs that raised more than $ 1 billion, according to Samsung Asset Management, which launched two ETFs.
Of that amount, more than $ 800 million went to four ETFs focused on South Korean meta-world-related stocks, while more than $ 338 million went to more global meta-universe ETFs, the data showed.
Some of the ETFs include KODEX K-Metaverse Active from Samsung Asset Management, Hanaro Fn K-Metaverse MZ from NH Amundi Asset Management, KBSTAR iSelect Metaverse KB Asset Management and Tiger Fn Metaverse Mirae Asset Global Investment.
The best holdings in ETFs include technology companies and chip manufacturers as well as promotions related to South Korea’s entertainment industry. For example, Samsung’s meta-universe ETF includes shares of Hybe, which owns a music label for the hugely popular K-pop group BTS, as well as video game makers such as Pearl Abyss.
Sharma of Indxx said the k-pop industry with its global popularity is expected to play an “integral” role in the development of the metaverse. He noted a number of recent announcements related to K-pop metaverse infrastructure projects and indispensable tokens. NFTs are digital tokens that prove ownership of assets such as art, collectibles or memes. K-pop bands and labels have launched NFT goods, as well as held concerts and fan events in the metaworld, according to media reports.
As the meta-universe ETFs launched in South Korea, retail interest followed. According to Samsung Asset Management, more than 70% of inflows into both domestic and global metaversed ETFs in South Korea are accounted for by retail investors.
“The metaverse is being touted as one of the most discussed key topics of 2021 in South Korea,” Sharma of Indxx said.
“These high cash flow figures represent a generally positive view of the metaverse, in addition to events that illustrate the growing popularity of South Korean citizens and government,” Sharma said.
Sharma said retail investors in the Asia-Pacific region are stimulating growth in ETFs on a larger scale. He noted that the number of Australian retail investors in ETFs grew by 33% last year.
Sharma, citing a recent Euroclear report, said demand in the Asia-Pacific region for ETFs should rise from $ 1.5 trillion to $ 5 trillion over the next five years.
Unlike U.S. retail investors, owned ETFs lagged behind institutional investors. According to Citi, investment advisers own nearly 40% of ETF shares listed in the U.S., up from just over 35% five years ago. Meanwhile, retail ownership has fallen from 40% five years ago to 38.5% now.
Overall, institutional investors continue to overshadow retail investors when it comes to total trading. While in the U.S. retail investors make up about a quarter of trading activity, they make up only 5% to 7% of total trading in Europe, according to Vanda Research. In China, the share of retail is more than 60%.