Overview of BlackRock's Metaverse ETF

Sep 16, 2024

Lecture on BlackRock's Metaverse ETF

Introduction

  • BlackRock launched a Metaverse ETF seeing popularity in AI and metaverse investments.
  • Largest asset management company and second-largest ETF issuer.
  • Despite AI stocks soaring, metaverse ETF performance is flat, viewed as a long-term opportunity.
  • McKenzie analysts forecast metaverse market to be worth trillions in the next decade.

BlackRock's Metaverse ETF (iShares Future Metaverse Tech and Communications ETF - Ticker: IVRS)

  • Offers exposure to metaverse-related companies globally.
  • Includes hardware and software companies involved in digital platforms, social media, gaming, 3D, AR, and VR.

ETF Characteristics

  • Expense Ratio: Less than 0.5%, competitive in the market.
  • Dividends: Pays a small dividend (~0.3%) that offsets the expense ratio.
  • Focus: Emphasizes future growth over value.
  • Index Tracked: Morningstar Global Metaverse and Virtual Interaction Index.

Metaverse Market Overview

  • Not just VR headsets but an integration of digital markets for business, media, gaming, advertising.
  • The digital transition is accelerating, presenting growth opportunities.

ETF Composition

  • US vs. International Stocks: 61% US, 39% international.
  • Market Cap: Predominantly mid to large-cap stocks with a focus on growth.

Valuations

  • Average valuations are high (PE > 20, PB > 3, PS > 4).
  • Growth-oriented companies expected to become profitable long-term.

ETF Performance

  • Rose over 30% since inception but flat in 2024.
  • Underperformed compared to S&P and NASDAQ.

Top Holdings

  1. Meta: Leading company heavily investing in the metaverse.
  2. Crafton: Known for PUBG; high ranking is questionable.
  3. Roblox: Aligned with the metaverse theme but considered risky.
  4. Sony: Known for PlayStation and VR but ranked too high.
  5. Autodesk: Leader in 3D design.
  6. Electronic Arts: Major gaming company.
  7. Take-Two Interactive: Owns Grand Theft Auto.
  8. PTC: Involved in modeling software.
  9. Ansys: Specializes in engineering simulations.
  10. Unity: Vital to the gaming industry.

Notable Omissions

  • Apple: Ranked 11th, surprising given its AR involvement.
  • Microsoft: Not in the top 10 despite major gaming and cloud investments.
  • Google: Also outside the top 10.

Personal Opinion

  • Prefers individual stock picking over ETFs due to disagreement with ETF holdings structure.
  • Views ETFs as useful for specific purposes and passive investment strategies.
  • Encourages discussion on the value of this ETF versus individual stocks.

Conclusion

  • Open for viewer opinions on the ETF.
  • Stresses the importance of aligning investments with personal goals and risk tolerance.
  • Thanks viewers for engagement.