Tue. Dec 6th, 2022

Investing in funds focused on the tech industry’s new frontier is booming in South Korea thanks to retail investors.

The term “metaverse” broadly refers to a virtual world in which people communicate and interact with each other via three-dimensional avatars. Virtual reality headsets like Oculus can be used in the metaverse to participate in activities such as gaming, concerts, or live sports.

Metaverse ETFs are Booming in South Korea

Metaverse ETFs launched in South Korea first in Asia last year as the internet’s next generation grew in popularity. ETFs are a diversified portfolio of stocks and bonds that mimics the performance of market indices.  According to Rahul Sen Sharma, managing partner of index provider Indxx, the first four South Korean metaverse ETFs launched in October attracted $100 million in inflows in just under two weeks.

But it’s not just South Korea. Metaverse ETFs have also been popping up in the US, and analysts have predicted that more will be launched in the near future. According to data from Samsung Asset Management, which launched two of the ETFs, there were eight metaverse ETFs listed in South Korea as of Jan. 19, drawing over $1 billion in inflows.

Over $800 million has gone into four ETFs focused on South Korean metaverse stocks, while more than $338 million has been invested in global metaverse ETFs, according to data.

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It is possible to invest in an ETF like Samsung Asset Management’s KODEX K-Metaverse Active, NH Amundi Asset Management’s Hanaro Fn K-Metaverse MZ or Mirae Asset Global Investments Tiger Fn Metaverse by using KBSTAR iSelect Metaverse.

The ETFs’ top holdings include tech companies and chipmakers, as well as entertainment-related stocks. Among the companies included in Samsung’s metaverse ETF are Hybe, the music label of K-pop sensation BTS, and video game developer Pearl Abyss.

Indxx’s Sharma expects the K-pop industry to play a “integral” role in the metaverse’s development. Many recent announcements related to K-pop infrastructure projects and non-fungible tokens were mentioned by him. An NFT token is a digital token that serves as a proof of ownership for assets such as art, collectibles or memes.. As reported by the media, various K-pop artists and record labels have released NFT-themed merchandise and held live concerts and events for fans.

Investing power in the hands of the public

Retailers in South Korea have taken notice of the availability of metaverse ETFs. According to data from Samsung Asset Management, retail investors make up more than 70 percent of the inflows into both domestic and global metaverse ETFs in South Korea.

This year’s metaverse is expected to be one of the most hotly debated issues in South Korea, according to Sharma from Indxx.

An increasing number of South Korean citizens and government officials are showing an interest in the concept of the metaverse, as evidenced by these high fund flow numbers, Sharma said. According to Sharma, retail investors in Asia-Pacific have been driving ETFs’ overall growth. He pointed out that the number of Australians investing in ETFs rose by 33% in the previous year.

ETF demand in Asia-Pacific is expected to rise from $1.5 trillion to $5 trillion in the next five years, according to Sharma, citing a recent Euroclear report.

By Adam

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