In Focus: Megatrends  

How can advisers benefit from the metaverse?

  • Explain what metaverse means
  • Identify investment opportunities in the metaverse
  • Highlight risks associated with investing in the metaverse

The world’s most recognised investment banks have already scoped out the total addressable market. Morgan Stanley sees metaverse-related businesses combined creating an $8.3tn opportunity in the US alone. Goldman Sachs sees an ultimate valuation of more than $12tn globally.

In February Nigel Bolton, head of Blackrock's fundamental European equity team, predicted “game-changer” products including AR glasses and 5G technology would fuel huge metaverse growth in 2022, not only for tech companies but also consumer, advertising and leisure stocks.

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But the pace of change may be even more rapid than that. Given that digital asset markets have grown from a $10bn industry to one worth $2tn in less than six years, such predictions should not be quickly dismissed.

What is driving growth?

One of the cornerstones of the metaverse is VR and its associated technologies, AR and mixed reality (MR).

The terminology has not yet been rigorously defined, but the key concepts are that VR immerses people in 3D virtual environments, while AR, MR and extended reality (XR) takes computer-generated images and overlays them on our view of the world.

Apple is working on headsets which could replace smartphones as the interface for metaverse users (Credit: REUTERS/Dado Ruvic)




VR and AR are not new technologies but their usage is growing and their influence is starting to bleed into everyday life.

With the mapping ability of Google Earth extending from the deserts of the Kalahari to the mountains of Bali, VR users today can visit almost every location on the planet in 3D from the comfort of their sofa.

Both this and the freedom of movement constraints imposed by the Covid pandemic have opened the door to a very large potential market opportunity. 

Is the metaverse investable? 

The best way to conceptualise the metaverse is to consider an investment index dedicated to capturing the theme. One example is the Solactive ETC Group Global Metaverse Index. 

Composed of 52 equities, the index focuses on companies that potentially stand to benefit from the adoption and usage of technologies expected to grow and support the functioning of the metaverse.

To do so, the index is broken down into six core segments:

  • AR/VR.
  • Creator economy.
  • Digital infrastructure.
  • Digital marketplace.
  • Gaming.
  • Digital payments.

Let's look at each of them in turn.

Augmented reality

As noted, the metaverse growth is largely being driven by the development of AR or VR.

Therefore a core investment component of the metaverse is companies engaged in the production of technologies, software, and hardware that allow consumers and businesses to interact in immersive XRs.