🚀 Can META Beat ARK Invest? This Metaverse ETF Changes Everything

00:10
I think it's safe to say there's some excitement about the Roundhill Ball Metaverse ETF, ticker
00:15
symbol M E T A. Well, I spent a few days researching it and boy is it not what I expected. In this
00:22
episode, I'm excited to share with you everything I've learned about the Meta ETF, the way it's
00:26
managed, and how it compares to ARKW, ARK Invest's fund themed around the next generation
00:31
of internet applications. Your time is valuable, so here's the bottom line upfront: the Meta
00:36
ETF could be a serious winner, not because of which stocks are in it, but because of
00:41
who is managing it and how. Timestamps are enabled for your convenience and let's plug
00:45
right into it.
00:46
Let's start by taking a look at what's inside the fund. In my opinion, the top stocks are
00:50
exactly what we'd want to see representing the Metaverse in its infancy today: Nvidia
00:55
at almost 11%, Roblox at almost 10%, and heavy hitters like Microsoft, Meta Platforms, and
01:03
Unity Software to round out the top 5 stocks. These top 5 positions account for just under
01:08
40% of the fund. The big thing these 5 companies have in common is that they will all influence
01:14
the Metaverse in multiple ways. For example, Nvidia builds servers and supercomputers,
01:19
and also the chips that go into devices that connect to the Metaverse, like computers and
01:23
VR headsets. Also, through their Omniverse initiative, Nvidia also builds virtual platforms
01:29
for content creation and developing digital twins of physical assets. That's why it sits
01:34
at the top. Every company inside this ETF falls into at least one of a number of categories
01:40
of things that benefit the metaverse. Those categories are hardware, computing components,
01:45
networking, virtual platforms, data services, digital payments, and content creation platforms.
01:51
For computing components, we have stocks like Taiwan Semiconductor, Qualcomm, Apple, Intel,
01:57
AMD, and Skyworks. It's cool to see companies like Qualcomm and Skyworks in here to represent
02:02
the mobile device market instead of limiting this fund to stationary devices and servers.
02:08
For content, we have Roblox, Unity Software, Sea Limited for their Garena Platform, Take
02:13
Two Interactive, Electronic Arts, and Activision Blizzard. These are some of the biggest interactive
02:18
content creators, publishers, and distributors on the planet and often have a platform that
02:23
connects their various products. For example, in Roblox, every player is automatically given
02:29
an avatar, which is a human-like character, that is consistent across the more than 40
02:33
million experiences on their platform. They have an on-platform currency called Robux,
02:39
which is good inside any experience. They offer other connective features at the platform
02:43
level like cross-game chat, seasonal events and celebrations, virtual lobbies, and so
02:49
on. In my opinion, these cross-game, platform-level features that connect people while they're
02:54
inside different experiences are a stepping stone to a fully connected Metaverse.
03:02
Many stocks are in this fund for more than one reason, meaning they fit into more than
03:07
one of these categories. Sea Limited is on here not just because of gaming, but because
03:11
of the digital payments solutions that spun out of their Garena Platform to become Sea
03:16
Money. As you can see, plenty of fintech and e-commerce companies like Amazon, Sea Limited,
03:21
Coinbase, Alibaba, Square, and Paypal are in the META ETF. Amazon isn't just in it because
03:27
of e-commerce though, it's on the list because Amazon Web Services powers about a third of
03:32
the internet today and will surely power a significant portion of the Metaverse tomorrow.
03:37
The way positions are chosen and weighted in this fund is a little different than how
03:41
ARK Invest does it and I actually really like how it's done. Let's jump over to the fact
03:46
sheet for some context real quick and then I'll show you what I mean. Roundhill directly
03:51
references ARK Invest's 2021 Big Ideas report, which I also reference when I cover the Metaverse.
03:57
That's I'm comparing this fund to ARKW. The market opportunity for the metaverse in video
04:02
games alone is expected to roughly double in the next 5 years. That's around a 15% compound
04:09
annual growth rate. According to ARK Invest, revenues from virtual worlds like Roblox and
04:15
others, are expected to double over the next 5 years as well. Putting that together with
04:20
Bloomberg Intelligence, who believes the market opportunity for the Metaverse could reach
04:25
$800 billion by 2024, we can make a ballpark guess that around half of the revenues, or
04:30
around $400 billion dollars, will come from video games and the other half will come from
04:35
somewhere else, mainly commercial applications. If you're interested in learning more about
04:39
the companies pushing the limits on VR for a wide variety of commercial applications,
04:44
check out my recent episode on it. I think it does a pretty good job connecting some
04:49
interesting dots and all of the companies I mention in it are actually inside this ETF!
04:54
I'll leave a link to that in the top right-hand corner of your screen right now and in the
04:58
description below as well. Alright, so the Metaverse will be an 800 billion dollar market
05:03
in 2025, split between consumer entertainment and commercial applications. To capture the
05:09
growth of this entire market, the Meta ETF is designed to offer investors exposure to
05:13
the performance of the Ball Metaverse Index, which is the first index globally designed
05:18
to track the performance of the Metaverse. This is where things get really interesting.
05:23
What is the Ball Metaverse Index?
05:25
Let's start with Matthew Ball. Matthew Ball is a managing partner of EpyllionCo, which
05:30
is an early-stage venture fund and advisor. He's also a Venture Partner at Maker's Fund,
05:35
which is the world's largest gaming venture fund. There's no doubt that this dude understands
05:40
investing. However, it should also be clear that he really understands the Metaverse.
05:44
This past summer, he published a 9-part series covering a general Framework for the metaverse,
05:49
as well as the roles of Hardware, Networking, Compute Power, Virtual Platforms, Content,
05:54
Payments, and a couple of other important elements of the internet today and how they
05:59
translate into a connected Metaverse in the future. Just like I read all of ARK Invest's
06:03
research, one of my goals over the holidays is to catch up on Matthew's essays so that
06:08
I can share my findings with you. Even Mark Zuckerberg says these essays are a great analysis
06:14
of what the Metaverse is and what it could be. My point in talking about Matthew Ball
06:18
the person is to show you this isn't some random fund manager capitalizing on the latest
06:23
market trends and buzzwords. His deep experience in gaming, media, and investing might just
06:29
make him the exact right person at the exact right time to manage a Metaverse Index fund.
06:36
So let's talk about the cool way it's being managed. The Ball Metaverse Index is maintained
06:41
by yet another organization founded by Matthew Ball, called Ball Metaverse Research Partners.
06:46
The Ball Metaverse Index is a selection of companies in categories defined by the Metaverse
06:51
Market Map. Based on the research and analysis of an Expert Council with deep domain knowledge,
06:56
the Metaverse Market Map is a detailed projection of the different types of companies that will
07:01
technically enable the Metaverse, and benefit from its generated revenues and profits. These
07:06
categories will change as technology and consumer behavior evolves, determined through analyses
07:11
by the Expert Council. This Metaverse Market Map the categories I talked about earlier:
07:16
hardware, compute, networking, virtual platforms, data services, digital payments, and content
07:22
creation platforms. This is where that list comes from and why we see stocks like Nvidia
07:27
and Unity Software, but also stocks like Sea Limited and Coinbase, and Cloudflare. Here's
07:33
the part I'm really excited about.
07:35
This fund is rebalanced quarterly but in a pretty cool way. Instead of being conviction
07:40
weighted like ARKW, this Index utilizes a proprietary tiered weighting methodology.
07:47
Ball Metaverse Research Partners maintains a database of companies relevant to the Metaverse.
07:52
Upon each Selection Day, held quarterly in March, June, September, and December, every
07:57
company in the database is ranked by the Expert Council as either a ‘Pure-Play,’ ‘Core’
08:02
or ‘Non-Core’ in each category outlined in the Metaverse Market Map. Each company
08:07
is given a score in each category based on how much of their business affects that part
08:12
of the metaverse. “Pure-play” companies receive a 5, “core” companies receive a 2,
08:17
and non-core companies receive a 1. The council then makes sure that the total combined weight
08:22
for each category is 100%. No single category, like networking or digital payments, can be
08:28
more than 25% of the portfolio and companies can be classified in multiple categories but
08:35
single components are capped at 8% of the category. If that sounds confusing to you,
08:40
think about it like this.
08:41
The metaverse Jedi council gets together and scores every company based on how relatively
08:46
awesome they are at Metaverse-related hardware, computer, virtual platforms, and so on. Then
08:53
they decide how important those same categories are to the metaverse and how the holdings
08:57
inside this index fund should be weighted as a result. If one company is too awesome
09:02
in a given category, the extra awesomeness is divided among the rest of the companies
09:06
in that category according to how awesome they are at that same thing. If one category
09:11
is too important, its excess importance is given to the other categories the same way.
09:17
Since we know the rules and the current weights, I bet we could come close to figuring out
09:22
what scores this Jedi council is assigning each company in each category. You know, for
09:27
science! If we figure that out and can keep it up to date over time, it could reveal which
09:32
companies are dominating which categories according to these industry experts, which
09:36
could give us some information that other investors don't have. Comment below or tweet
09:41
me at Ticker Symbol YOU if you're interested in helping me do that. This could be a really
09:45
fun project and I'm willing to set it up if there's interest.
09:50
And speaking of helping Ticker Symbol YOU, whether you're looking for a new home for
09:53
your own portfolio or you just want to invest in the channel that invests in you, you can
09:58
go to public dot com slash ticker symbol you and you'll receive a free slice of stock worth
10:02
up to $70 when you fund your account. Public dot com is free to use with no account minimum
10:07
to get started, doesn't charge fees for standard trades, and allows you to buy slices of stocks
10:12
for as little as one dollar. They also support over 20 cryptocurrencies, including Bitcoin,
10:18
Ether, and Solana, if that's how you're choosing to invest in the Metaverse and other advanced
10:23
internet applications. Either way, if you're interested in claiming that free slice of
10:27
stock worth up to $70, I'll leave a link to that exclusive offer in the description below.
10:32
Okay. So, I covered what's in the fund today, the key categories the stocks fall into, the
10:38
fund manager, and the weighting system. There's one more thing I want to do, which is to compare
10:43
it to ARKW, ARK Invest's fund themed around the next generation of internet applications.
10:47
Let's start with the fund holdings themselves. I was actually really surprised to find out
10:51
how different these funds are, given that they're both thematic funds focused on the
10:55
future of the internet and that the Meta fund's fact sheet directly references ARK Invest's
11:00
research. I'm happy to admit how wrong my assumptions were. ARKW is in blue and META
11:08
is in orange. ARKW holds a much wider variety of internet companies like Tesla, Teladoc,
11:15
Shopify, Roku, Spotify, Twilio, Draftkings, Palantir, Etsy, Docusign, and Nano Dimensions.
11:23
These companies are more about reducing the costs and pain points associated with professional
11:28
services by shifting to online infrastructures, enabling them to work on mobile devices, and
11:34
improving them with artificial intelligence. ARKW has a very broad theme.
11:39
Many of the companies only in META are very tightly related, including Nvidia, Microsoft,
11:45
Amazon, Taiwan Semiconductor, Qualcomm, Intel, AMD, Google, and Alibaba. Wow. Talk about
11:52
the tech giants of today. The two funds overlap on only 9 holdings: Roblox, Unity Software,
11:59
Coinbase, Metaverse Platforms, Sea Limited, Snapchat, Square, Cloudflare, and Disney,
12:07
which represent a pretty good cross-section of all the different categories that define
12:11
next-generation internet applications for ARK Invest and the different categories of
12:15
work the Metaverse fund cares about. These funds only overlap by about 23% by weight,
12:22
which isn't that much at all considering how similar they are in theme. Also, in case you
12:26
were curious, Meta only has 3 holdings in common with ARKK, ARK Invest's flagship innovation
12:33
fund: Unity Software, Coinbase, and Square. They hardly overlap at all. By contrast, ARKK
12:40
and ARKW overlap by a whopping 20 holdings and about 50% by weight. In my opinion, this
12:46
shows us that ARK Invest is trying to pick the next winners of the internet in their
12:50
ecosystem of actively managed funds while Meta is claiming that the current winners
12:55
will keep winning as today's internet transforms into tomorrow's Metaverse, which will encompass
13:00
many of the themes ARK Invest has individual funds for. These are two completely different
13:07
approaches to investing in the future. Comment below or tweet me at Ticker Symbol YOU with
13:12
your thoughts on the Metaverse ETF versus ARKK, ARK Invest's fund themed around the
13:17
next generation of internet applications. Are you surprised by how little they overlap
13:22
and how different their take is on the future of the internet? Which fund and weighting
13:26
system appeals to you more? Would you hold both in your portfolio or will you pick one
13:31
over the other? I'm excited to hear your thoughts.
13:34
Here's my assessment. When it comes to the fund managers, I'm excited to learn more about
13:39
Matthew Ball. I'm going to read his articles and try to decode his weighting system each
13:46
quarter. From what I've seen so far, he's put together a killer financial product. That
13:51
said, ARKW has been around for over 7 years now and has returned over 700% since inception.
13:57
People who think Cathie Wood is anything but an incredible portfolio manager are absolutely
14:02
delusional, no exceptions. ARKK, ARKG, ARKF, and ARKW were 4 of the best performing funds
14:04
last year, full stop. Speaking of which, ARKW has 5.5 billion dollars in assets under management
14:10
but don't let that fool you; the META ETF is already over 50% bigger than ARKX, ARK
14:16
Invest's newest fund themed around space exploration, even though it's only about half as old. So,
14:21
META is already proving to be a product investors want in their portfolios. That's awesome growth.
14:27
I think what it really comes down to is which investing approach you're looking for. Do
14:31
you want a fund manager that actively trades daily to take advantage of swings in price,
14:36
like the ones we're experiencing right now? Or do you want a fund with a structured weighting
14:40
system that gets updated quarterly, presumably based on the latest earnings reports? Do you
14:45
want a wider spread of companies that are enabled BY advances in the internet, like
14:50
Tesla and Teladoc, and Twitter? Or do you want a more focused group of companies that
14:54
are MAKING those advances in the internet, like Nvidia and Microsoft, and Unity? So,
14:59
here's my verdict.
15:00
For me, personally, I actually prefer META for a whole bunch of reasons. If you've been
15:05
following my portfolio project, you'll notice a LOT of overlap between this META ETF and
15:11
my own portfolio, so it really aligns with my vision of the future and my investment
15:16
thesis in it. Like I mentioned earlier, another thing I really like is that META has almost
15:21
no overlap with ARKK, while ARKK and ARKW overlap by a whopping 20 stocks or almost
15:27
50% by weight. META and ARKK could be 2 GREAT funds to hold a lot of and then pick individual
15:34
stocks to overweight in your own portfolio, a strategy I WILL talk about in future episodes.
15:40
For now, I hope this episode helped you learn about the Roundhill Ball Metaverse ETF, the
15:45
Ball Metaverse Index that it tracks, the system that Matthew Ball and his jedi council use
15:50
to shape that index each quarter, as well as Matthew Ball himself since funds are only
15:56
as good as their managers. If it did, consider investing in the like button and subscribing
16:00
to the channel with all notifications turned on. That's a great way to invest in the channel
16:05
that invests in you. Thanks for watching and until next time, this is Ticker Symbol YOU.
16:11
My name is Alex, reminding you, that the best investment you can make… is in you.