In South Korea, Metaverse exchange-traded funds are growing rapidly as private investors invest in funds focused on new frontiers in technology. The Metaverse generally refers to a virtual world in which humans interact through a three-dimensional avatar. Metaverse allows users of virtual reality headsets such as Oculus to participate in activities such as games, concerts, and live sports.
Image: The Korea Times
South Korea’s Metaverse ETF was first launched in Asia due to increased enthusiasm for the next-generation Internet last year. ETFs are a basket of stocks or bonds that track a wide range of market indices, providing more diversity to investors. South Korea`s first four metaverse ETFs launched in October and drew inflows of $100 million in just under two weeks, according to Rahul Sen Sharma, managing partner of index provider Indxx. South Korea isn`t alone though.
Metaverse ETFs have also been cropping up in the U.S. and analysts noted more will launch soon. As of Jan. 19, there were eight metaverse ETFs listed in South Korea, drawing over $1 billion in inflows, according to data from Samsung Asset Management, which launched two of the ETFs. Of that amount, over $800 million has gone into four ETFs focused on South Korean metaverserelated stocks. While more than $338 million has been funneled into more global metaverse ETFs, the data showed.
Some of the ETFs include Samsung Asset Management`s KODEX KMetaverse Active, NH Amundi Asset Management`s Hanaro Fn KMetaverse MZ, KB Asset Management`s KBSTAR iSelect Metaverse and Mirae Asset Global Investment`s Tiger Fn Metaverse. Top holdings in the ETFs include tech companies and chipmakers as well as stocks associated with South Korea`s entertainment industry.
Samsung`s metaverse ETF, for instance, includes shares of Hybe, which owns the music label for hugely popular Kpop group BTS, as well as video game makers such as Pearl Abyss. Indxx`s Sharma said the Kpop industry, with its global popularity, is expected to play an “integral” role in developing the metaverse. He noted a number of recent announcements related to Kpop metaverse infrastructure projects and nonfungible tokens. NFTs are digital tokens that represent proof of ownership of assets such as art, collectibles or memes.
Kpop groups and labels have launched NFT merchandise and have also held concerts and fan events in the metaverse, according to media reports.
As metaverse ETFs launch in South Korea, retail interest has followed. More than 70% of the inflows into both domestic and global metaverse ETFs in South Korea are from retail investors, according to the Samsung Asset Management data.
“The metaverse is touted as one of the most talkedabout key topics of 2021 in South Korea,” said Sharma from Indxx.
“These high numbers of funds flow represent a generally positive outlook on the Metaverse issue. In addition to the progress that shows that it is becoming more popular among South Korean citizens and governments,” Sharma said. I am. Sharma said private investors in the Asia Pacific region are driving growth within ETFs more broadly.
He said the number of Australian private investors in ETFs has increased by 33% over the past year. Citing a recent Euroclear report, Sharma said that demand for ETFs in the Asia-Pacific region will increase from $ 1.5 trillion to $ 5 trillion over the next five years.
In contrast, ownership of ETFs by individual US investors lags behind the share held by institutional investors. Investment advisors now own nearly 40% of U.S.listed ETFs, compared with just over 35% five years ago, according to data from Citi. Meanwhile retail ownership has slipped from 40% five years ago to 38.5% now.
Overall, institutional investors still eclipse retail investors when it comes to total trading volume. While in the U.S., retail investors make up about a quarter of trading activity. They constitute just 5% to 7% of Europe`s total trading volume, according to Vanda Research. In China, retail participation is over 60%.