The Metaverse remains one of the most significant ongoing technology transformations, promising to usher in the next era of the digital economy and reshaping how we work, interact and play. We believe that the Metaverse represents a multi-trillion economic transformation, and our analysis shows that its economic impact could reach $10.7 trillion over the next decade.
Sizing the Metaverse
The digital economy represented 15% of global GDP in 2021, according to World Economic Forum and IMF estimates. We believe that the Metaverse will be among the key catalysts to drive deeper penetration of digital businesses into the global economy, potentially adding 10 percentage points to digital’s share of global GDP.
If the digital economy continues to grow at the World Economic Forum’s long-term annual growth rate of 9.4%, above the IMF’s estimate for long-term world GDP growth of 4.9%, it can reach $43 trillion in 2033, accounting for 24.9% of global GDP. We believe the Metaverse can account for 25% of the digital economy at this point, bringing its total economic impact to $10.7 trillion.
Source: World Economic Forum, IMF, Roundhill Investments
Note: CAGR = cumulative annualized growth rate
Note: Substantial industry growth does not guarantee positive investment returns and may lead to significant volatility.
Although the path and eventual size of the Metaverse economy remains uncertain, we believe this framework provides a good means to understand its potential impact. As more of the Internet and digital economy shifts to experiences that are real-time 3D rendered, massive scale and experienced synchronously by an unlimited number of users, we will get a better sense of just how big it can be and adjust our analysis accordingly.
Comparing Market Estimates
How does our market size estimate compare to those of others? Our estimate is roughly in line with many others including Citigroup, Goldman Sachs, Morgan Stanley and KPMG. The chart below displays the Metaverse economy size forecasts from each of those against our own:
Source: McKinsey, Citigroup, Goldman Sachs, Morgan Stanley, KPMG, Roundhill Investments
Note: Forecasts are inherently limited and should not be relied upon when making investment decisions. There is no guarantee the sector will experience projected growth. In addition, there is no guarantee it will translate to positive fund performance.
How to Invest in the Metaverse
How can investors latch onto the Metaverse’s multi-trillion economic transformation? The Roundhill Ball Metaverse ETF (NYSE ARCA ticker METV) is the world’s largest ETF globally by assets tracking the Metaverse, according to Bloomberg data. The index provider, Ball Metaverse Research Partners (BMRP), is backed by a committee comprised of representatives from BMRP and experienced professionals with relevant domain experience in areas including online games, financial technology, data networking and hardware.
The council follows a rules-based methodology to provide exposure to seven market segments of the metaverse: compute; networking; virtual platforms; interchange standards; payments; content, assets and identity services; and hardware.
For additional information, including the latest fund holdings, a full prospectus and how to invest, visit roundhillinvestments.com/etf/metv.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the METV Metaverse ETF please call 1-855-561-5728 or visit the website at https://www.roundhillinvestments.com/etf/METV. Read the prospectus or summary prospectus carefully before investing.
Investing involves risk, including possible loss of principal. Metaverse Companies and other companies that rely heavily on technology are particularly vulnerable to research and development costs, substantial capital requirements, product and services obsolescence, government regulation, and domestic and international competition, including competition from foreign competitors with lower production costs. Stocks of such companies, especially smaller, less-seasoned companies, may be more volatile than the overall market. Metaverse Companies may face dramatic and unpredictable changes in growth rates. Metaverse Companies may be targets of hacking and theft of proprietary or consumer information or disruptions in service, which could have a material adverse effect on their businesses. Fund investments will be concentrated in an industry or group of industries, and the value of Fund shares may rise and fall more than more diversified funds. Foreign investing involves social and political instability, market illiquidity, exchange-rate fluctuation, high volatility and limited regulation risks. Emerging markets involve different and greater risks, as they are smaller, less liquid and more volatile than more developed countries. Depositary Receipts involve risks similar to those associated with investments in foreign securities, but may not provide a return that corresponds precisely with that of the underlying shares. Please see the prospectus for details of these and other risks.
As an ETF, the fund may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Due to the costs of buying or selling Shares, including brokerage commissions imposed by brokers and bid/ask spreads, frequent trading of Shares may significantly reduce investment results and an investment in Shares may not be advisable for investors who anticipate regularly making small investments. The Fund may invest in securities issued in initial public offerings. The market value of IPO shares will fluctuate considerably due to factors such as the absence of a prior public market, unseasoned trading, the small number of shares available for trading and limited information about the issuer. The purchase of IPO shares may involve high transaction costs. IPO shares are subject to market risk and liquidity risk. The Fund is a recently organized investment company with no operating history. The Fund invests in equity securities of SPACs, which raise assets to seek potential acquisition opportunities. Unless and until an acquisition is completed, a SPAC generally invests its assets in U.S. government securities, money market securities, and cash. Because SPACs have no operating history or ongoing business other than seeking acquisitions, the value of their securities is particularly dependent on the ability of the entity’s management to identify and complete a profitable acquisition. There is no guarantee that the SPACs in which the Fund invests will complete an acquisition or that any acquisitions that are completed will be profitable. Public stockholders of SPACs may not be afforded a meaningful opportunity to vote on a proposed initial business combination because certain stockholders, including stockholders affiliated with the management of the SPAC, may have sufficient voting power, and a financial incentive, to approve such a transaction without support from public stockholders. As a result, a SPAC may complete a business combination even though a majority of its public stockholders do not support such a combination. Some SPACs may pursue acquisitions only within certain industries or regions, which may increase the volatility of their prices.
Foreside Fund Services, LLC: Distributor.
*Neither Roundhill Investments nor METV Metaverse ETF are affiliated with these financial services firms. Their listing should not be viewed as a recommendation or endorsement.
