iShares Enters the Metaverse With New ETF

The issuer has launched an ETF based on one of last year’s hottest and worst-performing themes.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Today, BlackRock’s iShares arm rolled out an exchange-traded fund that is anything but first-to-market. The iShares Future Metaverse Tech and Communications ETF (IVRS) joins at least five other ETFs that invest in companies that are involved in the metaverse.  

IVRS has an expense ratio of 0.47% and lists on the NYSE Arca. 

CFRA Research’s Head of ETF Data and Analytics Aniket Ullal last year in an article published on ETF.com defined the metaverse as “emerging internet-based technologies and services focused on enhancing human experiences using augmented and virtual reality.” He also noted that as the metaverse matures, the companies held in ETFs covering the space will become more pure-play in nature.  

IVRS tracks an index of companies that are involved in all aspects of the metaverse, including those operating in the areas of virtual platforms, social media, gaming, 3D software, digital assets and virtual and augmented reality, the fund prospectus says.  

The new fund’s underlying index, the Morningstar Global Metaverse & Virtual Interaction Select Index, selects its companies based on their scores, which are related to exposure to the theme. Only the top two tiers in the five-level scoring system are included in the index. Companies must also be expected to see a 5% increase in profitability within the next five years due to their exposure to the metaverse theme, the prospectus says.  

Although there are at least six metaverse-focused ETFs currently trading, only one has significant assets. The Roundhill Ball Metaverse ETF (METV) is a runaway success, with $432.9 million in assets under management. The fund launched in June 2021 and represents the only significant competitor to IVRS. However, METV comes with an expense ratio of 0.59%, 12 basis points more than what IVRS charges. 

Metaverse-related companies were among some of the worst performers in 2022 but have rebounded significantly this year. METV was down nearly 53% last year but is currently up close to 27% year to date, according to Morningstar data.  

At launch, IVRS’ largest holdings in its 39-stock portfolio were in Meta Platforms Inc., 6.15%; NVIDIA Corp., 5.71%; and Apple Inc., 5.65%.  

 

Contact Heather Bell @ [email protected] 

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.