Retail investors are buying into metaverse ETFs in South Korea
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During the second day’s annual Mobile World Congress, an attendee snaps a photo as she enjoys an ‘extreme Sumarine 4D Simulation’ using immersive VR from SK Telecom.
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South Korean retail investors are buying into Metaverse funds that trade on the Metaverse exchange.
A virtual realm where people interact via three-dimensional avatars, the metaverse can be described as a broad concept. Users can use virtual reality headsets such as Oculus to participate in games, concerts, and live sports.
As the hype grew about the new generation of internet, South Korea’s metaverse ETFs became the first in Asia to go live. ETFs can be described as a group of bonds or stocks that closely track the market and provide investors with more diversification.
Rahul Sens Sharma, managing partner, index provider Indxx, said that the first four South Korean metaverse ETFs, launched in October, attracted inflows totaling $100 million in less than two weeks.
South Korea isn’t the only one. Metaverse ETFs also started to appear in the U.S., and analysts predicted that there will be more.
Data from Samsung Asset Management shows that eight metaverse ETFs had been listed in South Korea by Jan. 19. They drew more than $1 million in inflows as of January 19, according to the two ETFs.
Over $800million has been invested in four ETFs focusing on South Korean metaverse stocks. More than $338million has been channeled to more global metaverse funds, according to data.
Some ETFs are Samsung Asset Management’s KODEX K–Metaverse Active and NH Amundi Asset Management’s Hanaro Fn K–Metaverse MZ. KB Asset Management’s KBSTAR iSelect Metaverse, Mirae Asset Global Investment’s Tiger Fn Metaverse.
These are the top ETFs holdings tech companies and chipmakersStocks that are closely tied to South Korea’s entertainment sector. For example, Samsung’s metaverse ETF includes shares in Hybe which is the owner of BTS’s music label, along with video games such as Pearl Abyss.
Sharma, Indxx, stated that K-pop, due to its popularity around the world, will play an important role in developing the metaverse. Sharma pointed out a few recent announcements relating to K-pop metaverse projects and nonfungible tokens. Digital tokens called NFTs can be used to prove ownership of assets like art, collectibles or memes. K-pop labels and groups have also launched NFT merchandise. They have also organized concerts and fan events within the metaverse. according to media reports.
Retail investing power
South Korean retail investors have been interested in metaverse ETFs since their launch. Samsung Asset Management data shows that more than 70% inflows to South Korea’s metaverse ETFs come from retail investors.
Sharma, Indxx said that the metaverse was one of the top topics in South Korea for 2021.
Sharma stated that “These large fund flows represent a generally optimistic outlook towards the metaverse topic, in addition to developments which illustrate the increasing popularity among the citizens of South Korea.”
Sharma noted that ETFs are seeing more growth from Asian-Pacific retail investors. Sharma noted that ETFs have seen a 33% increase in participation by Australian retailers.
Sharma quoted a Euroclear study that showed the Asia-Pacific demand for ETFs will rise to $1.5 trillion to $5 Trillion over five years.
The U.S. retail investor’s ownership of ETFs, however, has fallen behind institutional investors. Data from Citi shows that nearly 40% now belong to investment advisors. This is compared to 35% just five years ago. However, retail ownership has fallen from 40% in five years to just 38.5% today.
When it comes to trading volume, institutional funds still outnumber retail investors. Vanda Research estimates that although retail investors are responsible for around 25% of U.S. trading, institutional investors only account for 5% to 7 percent of Europe’s trading volume. China has a retail participation of over 60%.
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