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ETF Wrap: ETF issuers go to battle in the metaverse

Metaverse ETFs dominated a week full of thematic launches

Theo Andrew

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This week marked the end of the summer holidays for many in the ETF industry with no fewer than 16 ETF launches across six European issuers.

Clearly, having spent most of their summer downtime together, the week became a race as to who could get its products out first. Of the 16 launches, 13 were thematic ETFs including three metaverse ETFs in three days.

It was only DWS which did not get the thematic memo, unveiling three Paris-aligned benchmark ETFs tracking US, European and Japanese equities.

Monday brought the first metaverse ETF as part of Fidelity International’s five-strong thematic launch. This was followed on Tuesday by an announcement from Franklin Templeton that it too would be launching a metaverse ETF.

Legal & General Asset Management (LGIM) made it three for three on Wednesday, unveiling the L&G Metaverse ESG Exclusions UCITS ETF (MTVR).

It means metaverse ETFs in Europe have more than doubled from two – the ETC Group Global Metaverse UCITS ETF (METP) and the Roundhill Ball Metaverse UCITS ETF (METV) – to five.

While all the ETFs track the same theme, investors will have to take a close look under the bonnet to establish which strategies they prefer. On first glance, the three freshly launched ETFs appear to have some cross over.

The Franklin Metaverse UCITS ETF (FLRA), which tracks the Solactive Global Metaverse Innovation Net Total Return index, has gone for a blue-chip approach, with its top five holdings comprising of Apple (5.1%), Paypal (4.4%), Alphabet (4.4%), Meta Platforms (4.2%) and Microsoft (4.1%).

However, the Fidelity Metaverse UCITS ETF (FMTV) is not too different, with Apple (5.3%), Alphabet (4.7%) and Meta Platforms (4%) all making the top 10 holdings. LGIM’s MTVR also has holdings in Meta Platforms and Microsoft but looks to be the most diversified of the new ETFs.

Investors could also be swayed by costs, with all three of the recently launched metaverse products undercutting both incumbents on price.

What Franklin’s FLRA lacks in imagination it makes up for in cost, the cheapest on the market with a total expense ratio (TER) of 0.30%. LGIM’s MTVR comes in second with a TER of 0.39% while the Fidelity Metaverse UCITS ETF (FLRA) has a TER of 0.50%.

METP and METV have TERs of 0.65% and 0.59%, respectively.

AXA IM returns with…thematic ETFs

AXA Investment Managers made its long-awaited return to the ETF industry with the launch of the actively-managed AXA IM ACT Biodiversity Equity UCITS ETF (ABIU).

The French asset manager is looking to capitalise on the ‘rapidly growing’ active ETF market, focusing initially on thematics before broadening out to fixed income.

It marks a re-entry into the ETF market for AXA IM after it sold its ETF business, EasyETF, to BNP Paribas Asset Management (BNPP AM) in 2009. Easy ETF, which it co-founded with BNPP AM in 2005, now has roughly €33.8bn assets under management (AUM) across 90 ETFs and index funds.

The firm looks to have chosen a challenging time launch, with the European ETF market experiencing consecutive months of outflows in June and July, the first time since March 2020 and the onset of the coronavirus pandemic.

ETF Wrap is a weekly digest of the top stories on ETF Stream

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