Updated on March 30, 2023
Visions of humanity’s future place us in a virtual reality. Here, every aspect of our lives is conducted in a seemingly alternate universe. Therefore it stands to reason that we would also complete our financial transactions in that virtual reality like we currently do in the ‘real world.’ The metaverse has sprung up visions of what life could be. This has led to the development of products and services to serve the virtual market. Consequently, the development of metaverse ETFs has led hesitant investors to ask: Do Metaverse ETFs pay dividends?
Although a relatively new concept, metaverse ETFs are fast gaining traction as one of the hot investments of the future. A metaverse ETF is an exchange-traded fund that tracks the performance of companies and assets connected to the metaverse. The assets in which a metaverse ETF can invest include stocks, bonds, commodities, and others. Consequently, dividends paid will typically depend on the dividend policy of the underlying asset.
Generally, stocks and other equities-based assets usually pay dividends, while bonds and other fixed-income assets may not. Despite this, the dividend policy may vary from one company to another. Therefore before expecting to receive dividends from metaverse ETFs, you must first understand the dividend policy of the underlying assets that the Metaverse ETF holds.
These might be the financial instruments of the future. This is because traditional options fail to provide the kind of returns investors are increasingly hungry for. Thematic ETFs refer to those that are focused on a defined theme or industry, as opposed to a broad market index. Themes can include examples such as technology, energy, healthcare, and others. Thematic ETFs give investors the advantage of gaining exposure to highly innovative industries they anticipate big returns from in the future.
Understanding Metaverse ETFs
A metaverse ETF refers to an exchange-traded fund that invests in companies involved in developing or functioning virtual reality or augmented reality platforms. Examples of the companies involved in this industry include gaming, social media, and other industries with a unique presence in the multiverse.
Companies wanting to be included in this technological innovation have devised new and exciting ways to serve their customers in the metaverse. Here are a few unique ways the metaverse is being used;
Companies are hosting virtual events and trade shows in the metaverse as a unique way to connect to their customers. This has also allowed them to showcase their products in real time without waiting for long lead times.
This may surprise many, but you can own a virtual piece of land. Some early adopter companies have already purchased storefront properties and offices in the virtual world. This is done in anticipation of the metaverse taking over how customers interact online.
There are now companies creating exciting entertainment and games for users that are specific to the virtual world. In this virtual world, customers can enjoy various entertainment and games. All this using their online avatars from the comfort of their homes.
You’ve probably never imagined attending a staff retreat in a virtual world. However, you might have to prepare yourself for this inevitable future. This is because companies are working on creating employee training programs run exclusively in the metaverse.
Branding and marketing
It should come as no surprise to anyone that advertising agencies worldwide have already devised exciting ways to market and sell their clients and products in the metaverse. Similar to the real world, the metaverse will have billboards and various other marketing materials to drive sales.
Examples of metaverse ETFs
For investors who are fearless in taking a chance on technology that though in nascent stages, has the potential to create major shifts in how people consume, here’s a list of metaverse ETFs you might look into.
Global X Video Games & Esports ETF (HERO)
This is one of the most popular ETFs, and it primarily focuses on the video games and esports industries. HERO has a diverse portfolio that includes companies involved in video game production, distribution, and promotion. It also invests in companies involved in streaming and esports events. Examples of its top investments include Tencent, Activision Blizzard, and Electronic Arts.
The ETF employs an algorithm that screens company filings in search of keywords that match the index theme to identify and rank them. Eligibility criteria include minimum market cap and liquidity requirements as specified by the fund and at least 50% of revenues earned from video games or esports activities. The fund’s investments also include ADRs and GDRs based on securities in the aforementioned industries.
VanEck Vectors Video Gaming and eSports ETF (ESPO)
This ETF is a market-cap-weighted ETF with its largest holdings capped at 8%. ESPO is rebalanced and reconstituted quarterly and holds roughly 25 stocks connected to video gaming and eSports. For companies to be eligible, at least half of their revenue must come from relevant industries, as well as game development, gaming-related software and hardware, and streaming services. Additionally, companies involved in eSports events, like league operators, are also included. Interestingly, the majority of the company’s investments are industry titan game developers and hardware companies based in the US, Japan, China, and South Korea.
Roundhill BITKRAFT Esports & Gaming ETF (NERD)
Similar to the other ETFs, ‘Nerd ETF’ focuses on the eSports and gaming industry. The fund holds a wide portfolio of companies involved in developing, distributing, and promoting video games. This fund gives its investors easy exposure to the video game sector without having to invest directly in those companies individually. This fund benchmarks the Nasdaq CTA Global Video Games Software Index, excluding fees and expenses.
ARK Next Generation Internet ETF (ARKW)
This is an actively managed ETF. ARKW primarily focuses on companies involved in developing and growing the internet and other connected applications. Companies within this fund include those whose services involve cloud infrastructure, mobile services, shared technology, new payment methods, big data, and others. The fund’s diverse portfolio includes companies in industries such as e-Commerce, online advertising, and social media. Industry titans such as Amazon, Google, and Facebook are just a few examples of the internet titans in this fund.
Global X Internet of Things ETF (SNSR)
Here is an ETF that primarily focuses on companies involved in the development and growth of ‘the internet of things’ industry. The fund features a diverse portfolio of companies with operations in areas such as connected devices, sensors, and data analytics. Examples of companies included in its impressive roster: are Cisco systems, Microsoft, and Amazon.
In conclusion, the entire industry of metaverse ETFs is new and uncharted territory. Therefore most metaverse ETFs might not currently pay any dividends to investors. However, investors should also remember that the question of dividend-paying ETFs depends mainly on the dividend policy of the underlying asset- most notably in the case of equities. As the metaverse moves to the mainstream, more metaverse ETFs are likely to begin offering investors dividends.
What are Metaverse ETFs?
Metaverse ETFs are exchange-traded funds that invest in companies developing digital infrastructure such as virtual reality, augmented reality, blockchain and other technologies. These ETFs offer investors the opportunity to invest in the fast-growing technology sector and benefit from the potential of these new technologies. They also offer diversification benefits by giving investors access to a broad range of investments in a single fund. In this article, we explore what metaverse ETFs are, their use cases, and how they can be used as part of an investment portfolio.
What asset classes can Metaverse ETFs invest in?
Metaverse ETFs are exchange-traded funds that invest in companies developing digital infrastructure such as virtual reality, augmented reality, blockchain and other technologies. These ETFs offer investors the opportunity to invest in the fast-growing technology sector and benefit from the potential of these new technologies.
Do Metaverse ETFs pay dividends?
Metaverse ETFs are designed to provide investors with a means of investing in the metaverse industry. As such, they may not necessarily pay dividends. However, many of the stocks held by these ETFs do pay dividends, and investors can benefit from them indirectly. It is worth noting that each of the ETFs mentioned above have different strategies and focus on different industries, so investors should do their due diligence before investing in any of them.
What are Thematic ETFs?
Thematic ETFs are investment vehicles that allow investors to gain exposure to specific industries or themes they believe will provide attractive returns in the future. Examples of themes include technology, energy, healthcare, and virtual reality or augmented reality platforms. Metaverse ETFs are exchange-traded funds that invest in companies involved in developing or functioning virtual reality or augmented reality platforms. These ETFs provide investors with easy access to an entire industry of innovative companies they believe will be successful and provide excellent returns. Examples of metaverse ETFs include Global X Video Games & Esports ETF, VanEck Vectors Video Gaming and eSports ETF, Roundhill BITKRAFT Esports & Gaming ETF, ARK Next Generation Internet ETF, and Global X Internet of Things ETF.
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