European metaverse funds have witnessed an unprecedented surge in assets due to the increasing hype surrounding AI stocks.
The recent interest surrounding AI and the ensuing surge in tech stocks have benefited a group of asset managers, including Amundi and Invesco. As a result, assets managed by European funds with a metaverse focus have reached all-time highs.
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Exclusive data from Morningstar supplied to Financial News indicates that the combined assets of European metaverse funds at the end of March were $1.1 billion, more than twice as much as the $403 million they managed the year before.
#AI hype propels EU #metaverse fund assets past $1bnhttps://t.co/i0KvDJIPZn
— Metaverse Rooms (@metaverserooms_) April 12, 2024
Surge in EU metaverse assets
With $205 million in assets, Amundi’s MSCI Digital Economy and Metaverse ESG Screened ETF is the biggest fund of its kind in Europe, according to Morningstar. The fund’s assets have increased by 85% since the end of 2022. Among its largest holdings are Nvidia and Alphabet.
In the meantime, assets in Invesco’s Metaverse and AI fund, which has the highest exposure to Microsoft and Meta Platforms, have increased by more than 260% to $180.2 million in the last 12 months.
Tony Roberts, co-manager of the Invesco fund, stated that AI has been the driver of fund flows. He added that AI is likely hastening the development and uptake of the metaverse.
According to Vincent Denoiseux, head of the investment strategy at Amundi ETF, an increase in metaverse fund assets reflects growing investor confidence in the digital economy and the metaverse as pivotal elements of the future economic landscape.
Among the Magnificent Seven stocks, which accounted for the majority of the S&P 500’s 24% annual return last year, are Nvidia, Alphabet, Microsoft, and Meta Platforms. Just Nvidia’s share price increased by more than 230% in the previous year and by nearly 80% since the beginning of 2024.
Even though a spike in tech stocks has strengthened investments in companies deemed crucial to the metaverse, investor interest is still growing.
Over $184 million in new capital
Morningstar reports that between January and March of this year, metaverse funds in Europe raised $184 million in new capital, up from $38.6 million during the same period in 2022.
As per Kenneth Lamont, senior research analyst at Morningstar, no other theme has seen so many fund launches so quickly, as fund providers fell over themselves to be the first to market.
Lamont noted that although investors showed “an uptick in interest” in the metaverse theme, fund inflows remained modest.
According to Lamont, Facebook’s rebranding as Meta in the latter quarter of 2021 marked the peak of the hype. However, investors started to look elsewhere as the news flow started to change, even as many of these recently established funds launched. The majority of funds did not draw large inflows.
With assets ranging from $3.8 million to $7.4 million, the Franklin Templeton, Fidelity International, and Legal and General Investment Management metaverse funds, which were introduced in 2022, are among the smallest in Europe.
Additionally, Dina Ting, head of global index portfolio management at Franklin Templeton ETFs, stated that the metaverse’s place at the intersection of blockchain technology and AI continues to spawn appealing long-term opportunities.
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