Franklin Templeton is set to expand its metaverse ETF to encompass artificial intelligence and blockchain, reflecting a strategic move to broaden its technology exposure. This expansion will lead to a rebranding of the Franklin Metaverse UCITS ETF (METU) to the Franklin AI, Metaverse and Blockchain UCITS ETF. The fund will now track the Solactive Global Metaverse Innovation index and include an additional 15 companies in its portfolio, raising the total number to 75.
Focused Investment Strategy
The ETF’s investment objective remains consistent, aiming to provide exposure to technologies that support products and services around the metaverse, blockchain technologies, and now artificial intelligence. The thematic categories within the index will be streamlined from seven to four, namely the metaverse ecosystem, blockchain technology, digital asset platforms, and AI applications and services. These changes are scheduled to take effect on June 7.
The top three holdings of METU currently are Nvidia, which constitutes 8.2% of the portfolio, Meta Platforms at 5.4%, and Coinbase Global at 5%. Since its launch in September 2022, METU has managed to grow its assets to a conservative $3.6 million.
Market Movements and Comparisons
Franklin Templeton’s decision follows similar movements in the ETF market. Recently, HANetf revamped its metaverse ETF into a broader ‘Web 3.0’ strategy, which involved a new name and index, as well as expanded sector exposure. Conversely, Roundhill Investments exited the European ETF market in October, closing its metaverse ETF just 18 months after its inception.
In the U.S. market, Franklin Templeton oversees $17.6 billion across 60 ETFs. Among these, the largest is the Franklin FTSE Japan ETF (FLJP) with $2.09 billion in assets. Over the last trailing year, the Franklin FTSE Japan Hedged ETF (FLJH) has been the best performer, achieving a 36% gain. The most recent addition to their ETF lineup is the Franklin Bitcoin ETF (EZBC), launched on January 11.
Despite its expansive range of ETFs, Franklin Templeton does not offer a metaverse-focused ETF in the U.S. The closest counterpart to the U.K. product is the Franklin Intelligent Machines ETF (IQM), which boasts a $20.9 million asset base and has seen a 38% increase over the past year.
Industry Insights and Future Directions
Patrick O’Connor, Franklin Templeton’s global ETF head, has discussed the company’s expanding ETF offerings, indicating a proactive approach to evolving market demands. The inclusion of AI and blockchain technologies within the existing metaverse ETF is seen as a response to the growing investor interest in these cutting-edge sectors.
This strategic enhancement aims to provide investors with diversified exposure to pivotal technologies driving the future digital economy. The integration of AI and blockchain not only broadens the investment scope but also aligns with emerging trends in the tech industry, ensuring that the fund remains relevant and attractive to investors seeking growth opportunities in these innovative areas.
The upcoming changes to the Franklin AI, Metaverse and Blockchain UCITS ETF signify a commitment to staying at the forefront of technological advancements, offering investors a comprehensive platform to capitalize on the convergence of AI, blockchain, and the metaverse.
