Fidelity Is Reportedly Making its Move into the Metaverse

Fidelity is reportedly trying to make its own moves into the fast-evolving Metaverse economy.

Fidelity, which manages trillions of dollars in customer assets, has submitted an application with the US Securities and Exchange Commission (SEC) this past Friday for an exchange-traded fund (ETF), known as the Fidelity Metaverse Index ETF.

The actively managed fund, Fidelity explained in its recent filing, will be primarily focused on firms that are developing, manufacturing, distributing or selling products and services that are  related to supporting the nascent Metaverse.

Fidelity’s ETF filing has been made after the firm’s application for a spot-based Bitcoin ETF had been rejected by the SEC (which is now the latest among many others to have not been approved).

A thematic ETF focused on the Metaverse might not go through as many regulatory challenges. And should Fidelity be able to get approval, it may join a number of other ETFs currently  aiming to take advantage of the term and other related ideas, including blockchain or distributed ledger tech (DLT), NFTs, as well as Web 3.0 solutions.

Notably, several asset management firms have decided to introduce their Metaverse/blockchain or DLT-related ETFs or intend to do so in the foreseeable future.

As reported by Barron’s. the Defiance Digital Revolution ETF (ticker: NFTZ)  launched this past December, providing exposure to various blockchain/DLT, crypto, and NFT-themed stocks.

Major holdings reportedly include eBay (EBAY), Draftkings (DKNG), and Block (SQ), as well as crypto-focused stocks such as  Coinbase Global (COIN).

The ETF reportedly owns stocks that might be able to make profits from the NFT mania, including Plby Group (PLBY), which is the publisher of Playboy magazine, and Funko (FNKO), a creator of pop culture digital collectibles.

Fund supporter Proshares, which has introduced a BTC Strategy ETF (BITO), submitted an application for a Metaverse-focused ETF in December 2021.

The ProShares Metaverse Theme ETF could include firms offering tech and services related to  Metaverse. This, according to its SEC filing, including firms like Apple (AAPL), Nvidia (NVDA), and Facebook ‘s Meta Platforms (FB), and may be actively managed.

Notably, the largest blockchain-focused ETF right now is the $1.5 billion Amplify Transformational Data Sharing ETF (BLOK).

Others in this industry segment include the $270 million Siren Nasdaq NexGen Economy ETF (BLCN) and the $81 million+ Global X Blockchain ETF (BKCH).

Although these types of funds provide thematic exposure to the latest tech platforms and solutions, they’re basically considered side-bets on the tech-focused Nasdaq Composite Index. And technology has been struggling recently to gain traction due to the possibility of even higher interest rates and stricter monetary policies.

Cryptocurrency-based ETFs have also faced challenges. As reported by Barron’s, the Defiance Digital Revolution ETF is currently down around 30% in 2022 against a 13.3% drop for the Nasdaq. Meanwhile, the Amplify ETF has dropped 23%.

Ben Johnson, Director of ETF Research at Morningstar, noted during an interview:

“The way that a lot of these funds have been positioned has evolved with the broader crypto narrative. Many that were originally pitched as blockchain funds are now being positioned as a way to get second-hand crypto exposure.”

Investors, he warned, must consider approaching these funds “with eyes wide open, clutching their wallets to their chests.”



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