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ETF Wrap: ETF issuers engage in combat in the Metaverse

With no less than 16 ETF launches from six different European issuers, this week signaled the conclusion of the summer break for many in the ETF business.

After spending the majority of their free time together over the summer, it was obvious that this week would be a competition to see who could get their products first.Thirteen of the 16 new ETFs were based on a theme, and three metaverse ETFs came out in just three days.

Only DWS didn’t get the theme memo, because it released three benchmark ETFs in Paris that track US, European, and Japanese stocks.

As part of Fidelity International’s five-theme launch on Monday, the first ETF for the metaverse came out. Then, on Tuesday, Franklin Templeton announced that it, too, would be launching a metaverse ETF.

Legal & General Asset Management (LGIM) released the L&G Metaverse ESG Exclusions UCITS ETF on Wednesday, making it a perfect three for three.

It means that there are now five metaverse ETFs in Europe instead of just two, the ETC Group Global Metaverse UCITS ETF (METP) and the Roundhill Ball Metaverse UCITS ETF (METV).

While all of the ETFs follow the same theme, investors must carefully examine the inside of each ETF to determine their preferred strategy. 
The three recently announced ETFs seem to have some overlap at first glance.

The top five holdings of the Franklin Metaverse UCITS ETF (FLRA), which follows the Solactive Global Metaverse Innovation Net Total Return index, are Apple (5.1%), Paypal (4.4%), Alphabet (4.4%), Meta Platforms (4.2%), and Microsoft (4.1%).

The Fidelity Metaverse UCITS ETF (FMTV) is not much different, though, with Meta Platforms (4%) and Alphabet (4.7%) rounding out the top 10. Although it appears to be the most diversified of the five ETFs, LGIM’s MTVR also holds investments in Microsoft and Meta Platforms.

Costs may also influence investors because all three of the recently released metaverse products are less expensive than the two market leaders.

Franklin’s FLRA, which has the lowest total expense ratio (TER) on the market at 0.30%, more than makes up for its lack of creativity. The Fidelity Metaverse UCITS ETF (FLRA) has a TER of 0.50%, while LGIM’s MTVR is in second place with a TER of 0.39%.

METP and METV have respective TERs of 0.65% and 0.59%.

Returning with…thematic ETFs is AXA IM

The actively managed AXA IM ACT Biodiversity Equity UCITS ETF marked AXA Investment Managers’ long-awaited comeback to the ETF market.

The French asset management wants to profit from the “rapidly growing” active ETF sector, initially concentrating on thematics before extending to fixed income.

After selling its EasyETF ETF business to BNP Paribas Asset Management (BNPP AM) in 2009, AXA IM is now back in the ETF market. 90 ETFs and index funds totaling approximately €33.8 billion in assets under management (AUM) are managed by Easy ETF, which it co-founded with BNPP AM in 2005.

Given that the European ETF market saw consecutive months of outflows in June and July for the first time since March 2020 and the start of the coronavirus epidemic, the firm appears to have chosen a problematic time for its launch.

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