The metaverse, a new stock market eldorado - Trends-Tendances sur PC

The metaverse, a new stock market eldorado – Trends-Tendances sur PC

Despite the correction in the technology sector, the rise of the metaverse is indisputable, as evidenced by the recent launch of two funds exposed to this theme.

The metaverse was one of the last trends in the tech sector to emerge in late 2021 before the sharp price correction that occurred following the change in monetary policy stance in developed countries. This reversal was further confirmed in recent days with the rise in the European Central Bank’s key rate, which put an end to its negative yield policy in place since 2014.

The metaverse was one of the last trends in the tech sector to emerge in late 2021 before the sharp price correction that occurred following the change in monetary policy stance in developed countries. This reversal has been further confirmed in recent days with the rise in the European Central Bank’s key rate, which put an end to its negative yield policy in place since 2014. But first of all, what is the metaverse? (also called web 3.0) and how is this an opportunity for investors? In the first version of Internet interactions, the ambition was mainly to connect users with information, and this use is still very important today. Subsequently, the Internet was increasingly used to allow users to contact each other with messaging systems and social networks. With the metaverse, it is all the means allowing you to virtualize your life which is put at the center of the magnifying glass. This can be schematized by four major sub-sectors that are at the intersection of the real world and the virtual world: social networks, online gaming, decentralized work solutions, and all the companies that implement the architecture of this virtualization (hardware, semiconductors). A film like Ready Player One is an example of what the metaverse approach could be in a few years, with the democratization of virtual reality headsets. The fall in prices has not discouraged management companies from developing strategies for this new Eldorado, with two new products which have appeared on the market since the beginning of the year: Axa WF Metaverse (ISIN: LU2429106052 ) and Belfius Equities Virtu=All (ISIN: BE6333894853). In addition, there are also several trackers (ETFs) already exposed on this theme, as well as other specialized technology investment funds in certain areas adjacent to the metaverse theme, such as those offering to invest in artificial intelligence or digitalization of companies. Our table therefore mainly includes these latter products, given that strictly metaverse funds do not yet show a sufficiently long performance history. Tom Riley is responsible for thematic strategies at Axa Investment Managers, i.e. a range of funds spread over three main groups (innovation, demographics and sustainability) whose assets today exceed 12 billion dollars, of which around 3.5 billion dollars are the only Axa WF Robotech fund (the oldest fund in the range launched in 2015). “We launched our strategy on the metaverse last April, with outstandings reaching around 40 million euros,” explains Tom Riley. For its part, the launch of the Belfius Investment Partners fund (managed at Candriam by Johan Van der Biest) is even more recent, since it dates back to the end of June, with assets under management approaching 50 million euros. . “Although the metaverse is only in its infancy today, it is already clear that this convergence of the physical and digital worlds will open the way to a large number of new applications in multiple fields, like blockchain or virtual reality.” For Tom Riley, “this is a significant opportunity which is now experiencing very rapid growth, and which is on the way to imposing itself on the whole of the population. The metaverse is moreover only the natural evolution of the internet as we know it, a dynamic universe that offers new opportunities through improved 3D rendering and acceptance of these developments among new generations.” It also points out that many very profitable groups are seeking exposure to developments related to the metaverse, and that the very large majority (between 80 and 90%) of the companies in the portfolio will be profitable in 2022. therefore not to invest in a set of small companies that generate significant losses,” he said. There are similarities with the other themes proposed by the French manager, i.e. approximately 20% with the strategy on robotics (particularly at the level of semiconductors) and 20% with the strategy on the digital economy (particularly at the level of cybersecurity and online payments). “At the moment, our fund is above all a more hardware-based fund, with a strong positioning in the semiconductor segment”, continues Tom Riley. Both the Axa IM fund and the Belfius IP fund have a particularly marked concentration on American stocks (more than 70% of assets under management), with a representation of large caps ranging between 60 and 70% of assets under management. Technology stocks are in a good position in the allocation, with around 60% of assets under management, the balance being in position, for example, in the communication sector (online games, social networks, etc.). “Eventually, we should see an increase in sector diversity as the metaverse affects a growing number of sectors, estimates Tom Riley. Similarly, the weight in emerging markets is currently only 10%, but these countries already represent more than 30% of turnover, with very rapid growth coming from these regions (particularly Asia).” Groups such as TSMC, HYBE or Tencent are already among the major positions in the portfolio. The question of purity is always central in a thematic product. At Axa IM, Tom Riley intends to invest around 50% of assets in names for which the metaverse constitutes a significant part of the turnover, with as a great example the American group Matterport, which specializes in visits virtual real estate. “For us, it is important to be able to easily show why a group is included in our fund allocation.” The manager also stresses that the fall in prices since the beginning of the year now allows us to enter this strategy at particularly attractive valuation levels, especially since earnings expectations have held up well. “The relationship between the price/earnings ratio (P/E) and the growth in turnover is currently at a level that had not been reached for five to six years”, he specifies. “The second quarter should be the last during which the growth of value companies will be higher than that of growth companies, concludes Tom Riley. Subsequently, value groups will have more difficulty in outperforming in a context where economic growth will increase. face more headwinds and we believe the market should discriminate in favor of companies whose results are going to be more robust.”

.

Leave a Comment

Your email address will not be published.