METV: The Metaverse Provides Opportunities For Tech Stocks

Investment paper

Round Hill Ball Metaverse ETF (NYSEARCA:METV) Is designed to provide investors with exposure to the Metaverse. With new technologies such as virtual reality and game engines, Metaverse can be shaped and grown as follows: They are trying to extend the capabilities of the virtual world.

Based on Bloomberg Intelligence and ArcInvest data, the Metaverse is one of the fastest growing technology segments and is expected to more than double by 2025. For now to choose a winner. Looking at the valuations of the entire portfolio, I think many components are overvalued. Long-term investors are better off holding long-term dated call options than buying the underlying stock. That said, METV can be a great choice for speculators looking to take advantage of strategic volatility in the short term.

Strategy details

The Roundhill Ball Metaverse ETF tracks the Ball Metaverse Index. This strategy seeks to gain exposure to the Metaverse, which can be characterized as an alternative to the current Internet, which provides an experience that interconnects the virtual and real worlds. This includes companies involved in computing, networking, virtual platforms, interchange standards, and payments.

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Portfolio composition

From the sector allocation chart below, the fund focuses on gaming platform providers (~ 20%), computing component providers (~ 19%), and companies developing cloud solutions (16%). You can see that is followed. In total, the top three sectors make up about 55% of the fund’s total assets. In terms of geographic distribution, almost 81% of the funds are invested in the United States, followed by Singapore (~ 4.6%) and South Korea (~ 4%).

METV invests approximately 46% of its funding in large-cap growth stocks, which are characterized as large companies dominated by growth factors. Large-capitalization companies are typically classified as companies with a market capitalization of over $ 10 billion. The second largest allocation is large cap blend equity, which accounts for 25% of total assets. It’s interesting that METV invests about 66% of its funds in growth stocks. Growth stocks are generally more volatile than value stocks. At the same time, small cap issuers are undervalued because of their light weight. Some investors prefer higher exposure to small and medium cap stocks as they can outpace large caps over the long term.

The fund is currently invested in about 43 different stocks. The top 10 holdings represent about 44% of the portfolio and the weight of a single stock does not exceed about 9%. In my opinion, METV is quite diversified as we feel that the number of companies in this niche is limited at this time.

Since we are dealing with stocks, one of the important features is the valuation of the portfolio. According to Morningstar data, the fund is currently trading at a price-to-book value ratio of approximately 5 and an average price-to-book value ratio of approximately 23. Looking at the list of components, these companies are one of the best in the world and clearly have a moat. Meta Platforms Inc. (Meta Platforms Inc. (FB), Most of the portfolio seems to be overvalued. Moreover, high interest rates in developed markets clearly do not signal high price-earnings ratios, and I believe bullish papers carry risks.

Is this ETF suitable for me?

Invesco QQQETF (NYSEARCA: NYSEARCA:QQQ) Evaluate which was the better investment in the last 9 months. During that period, QQQ outperformed BOTZ by about 23 percentage points. Looking at METV’s performance, investing $ 100 in this ETF at the start is worth $ 73.94. This is a terrible relative and absolute return.

With little data on METV so far, I find it difficult to assess fund performance over the long term. That said, I think the last few months have given us a glimpse of how serious METV drawdowns are, from an absolute and relative perspective.

I personally believe that this strategy remains less stable than QQQ in the current macro environment and can result in poor performance in the short term. In the long run, it all depends on how successful the Metaverse actually is. For the time being, speculators will be able to benefit from short-sided or long-sided volatility. For long-term investors, I believe call options are a safer alternative than simply buying stock.

Important point

Metaverse is a fast-growing technology and is expected to generate attractive returns for investors. At this stage, many well-known companies are competing to increase their market share in this niche. METV provides a cost-effective way to gain exposure to this sector. I think the bullish dissertation is risky as the fund trades in a market with rising interest rates and high inflation with more than 20 times the return. Long-term investors would prefer to have a long-term dated call option rather than buying the underlying stock. However, METV may be an excellent option for speculators who want to take advantage of strategic volatility in the near future.