Presented by Syntax Advisors
Margareta Hricova: Welcome to ETF TV, your insight into the world of exchange traded funds, issuers and investments. I am Margareta Hricova and joining me today is Tim Maloney, co-founder and Chief Investment Officer of Roundhill Investments, and Deborah Fuhr.
Welcome to the show.
Tim Maloney: Thank you for having me.
Deborah Fuhr: Thank you. So, Tim, in the US, Roundhill Investments is an ETF sponsor. You recently listed your first product here in Europe. Why did you come to Europe?
Speaker 2: The short answer here is the ETF we listed is focused on the metaverse. We believe there’s a real opportunity to bring it to Europe. When we launched it in the US, we saw material flows pretty quickly, but also a lot of interest from European investors. And really, we want to go where the demand is.
The slightly longer answer; we’re big believers in giving access to investment products that we think are cool. That’s why we make them to as wide an audience as we can, and we quickly found that borders for things like ETFs are not terribly open. So if you want to give European investors an opportunity to buy it, you have to do a proper listing in Europe. So, once we saw that demand and figured that out, we said, ‘let’s get the wheels in motion for this.’
Margareta Hricova: Your new ETF provides exposure to the Metaverse. What is the Metaverse?
Tim Maloney: The easiest way to think about it is ‘shared, virtual spaces,’ where people can share in many types of different experiences together, whether that’s playing, working, many of the things you do in the sort of physical economy.
I think the reality is that what the metaverse will ultimately be is something we’ll have to wait to see. It’s being built now. It’s going to take a lot of investment to get to that kind of final, end state. And really, I don’t think anyone knows what it’s going to look like.
For me, the most tangible manifestation of the metaverse actually comes from video games. So if you look at something like Fortnite, which I think many viewers will at least heard of, even if they’re not kind of deep down the gaming rabbit hole, over time, they’ve offered different experiences within the game. Things like concerts or launches of trailers for new shows. And that’s kind of pushing in the direction of a kind of virtual space that’s more than just its intended original purpose of gaming, and really serves a broader purpose of building community. And I think that’s one easy way to think about what this could look like into the future.
Deborah Fuhr: So you mentioned the metaverse is evolving. Do you see the metaverse as a real investment opportunity now?
Tim Maloney: I do. I do think it requires a little bit of creativity to get there. You know, as I said, the metaverse that we’re all kind of building towards doesn’t necessarily exist in that final form yet. So you have to get a little creative in building out an investment portfolio that tracks it.
The way we have done it is we’ve partnered with several experts on Metaverse, the team headed by Matt Ball. And really, they put together an index that looks at the elements that will eventually build up the metaverse. They break it into seven categories and then they go and find those companies that are building out those underlying elements as we speak. They don’t have metaverse as a line item in their income statement. Not yet, at least, but they are building the technologies that will eventually be caught in the Metaverse.
Margareta Hricova: And how many companies are in the index you’re tracking?
Tim Maloney: So right now, there are 43. That can go up and down over time, depending on the opportunity set available, and we rebalance accordingly. It is not prescriptive, I think that’s important. We don’t have any hard and fast rules about exactly how many, say for kind of the basic requirements of an ETF. And over time, I do expect that it will change as the opportunity set does.
Deborah Fuhr: And do you expect to launch more ETFs here in Europe?
Tim Maloney: It’s very much the hope. We’re big believers in creating access and bringing along with that content and information and really education. And it’s really meant to be for all investors, not just for institutions. And we’re not kind of proactively selling it, I think that’s one big differentiator, as we don’t have a sales team. That may change in the future, but we’ve really leaned into a marketing first approach.
What we’re really learning now is how effective we can be with that approach that we’ve used in the US for several years now. In a new market in Europe, which is as everyone listening will probably know, a little bit more fragmented, the natural next step would be our sports betting product, which is our second largest fund in the US, should we decide to continue investing in this initiative, which I expect we will.
Deborah Fuhr: So if you don’t have salespeople here, how are you going about marketing?
Tim Maloney: Our strategy is really to reach as many people as we can with content. There’s a few channels that we’ve ended up being most active in; twitter, we have an email newsletter, and we’re also pretty active on LinkedIn, and the goal of that content is kind of threefold. The first is to reach actual end investors, right? And then the second and third are related; to get more kind of visibility from resharing, that’s one of the powers of social media. And then three, it’s actually reaching the media because for us, that’s a really powerful tool for getting in front of new investors. So our thesis is that if content that we’re providing is valuable, then that’s the value proposition. People will say, ‘okay, they’re the guys with the good metaverse content. They have a fund. Probably has some idea of what they’re doing. I’m going to buy it.’
Deborah Fuhr: That’s great. Thank you for joining us.
Tim Maloney: Thanks very much for having me. It’s been a pleasure.
Margareta Hricova: Debbie, can we talk about some of the other news in the industry?
Deborah Fuhr: Last week, we had 22 new listings and 21 new cross-listings, so year to date, that takes us to 380 new ETFs that have been listed. There’s been 412 cross-listings. There’s been 41 closures and 36 de-listings, so net we have had 339 new ETFs listed this year, and 376 new cross-listings.
When we look at the new products that have come to market, we see Aventis has moved into the responsible investing space. We’ve seen some more crypto products. We saw a new ETF on MSCI USA listed in Saudi Arabia. We’ve seen some more ESG products, so clearly the trends have been moving in a pretty similar fashion.
We did finish our ESG and active event, which is very interesting. We saw a lot of news coming out around regulations in the US, in Europe. We’re seeing a real adoption in Europe of ETFs that are providing exposure as Article Eight and Article Nine funds, we’re seeing conversions. In the active space we are seeing more products come to market.
Coming up, we have our Latin American event on April 27th and 28th, and I’m looking forward to that. We’ve seen that Argentina is doing something similar to Brazil’s BDRs and so more to come on that shortly.
Margareta Hricova: Thank you, Debbie, and thanks again to Tim for joining us today, and to our sponsors, Syntax Advisors, and to all of you for watching.
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