Time for the metaverse?

The general public got its first and foremost exposure to the then-unknown concept of the metaverse when Mark Zuckerberg turned his company around and buried the all-powerful and, at the time, revolutionary Facebook to make way for Meta as its new flagship.

"Metaverse is the next evolution of social connections. Our company's vision is to help make the metaverse a reality. That's why we've changed our name to reflect our commitment to this future," the company explains about this new field of action.

The reality is that the metaverse ecosystem is constantly evolving and growing. An increasing number of investment professionals are firmly committed to this world, while asset managers and even banks are launching their own funds and products dedicated to the metaverse.

Virginie Maisonneuve, Global CIO Equity

The metaverse is the culmination of the last 30 years of digital acceleration in nearly every facet of daily life. It should be thought of as a seamless integration of the physical and digital worlds. It’s an existence in which our digital identity is as valuable as our physical identity, rather than simply some virtual reality or augmented reality.

In our definition, the metaverse and Web 3.0 – a version of the internet based on blockchain that supports a new level of interconnectivity – are two sides of the same coin. Accordingly, we think that the metaverse is a megatrend that will drive profound changes in the evolution of society.

The data show that internet adoption globally continues to grow, and each age cohort is larger in size than the previous generation. For them, working and living in the digital space is second nature. As the number of digital natives grows, the world is spending more time on the internet per day. Accordingly, we believe that the total aggregate revenues of companies in the metaverse could quadruple to USD 25-30 trillion by 2040.

How should investors capitalise on this theme? Initially, we see potential opportunities to invest in companies creating Web 3.0 infrastructure, the application ecosystem built to utilise this infrastructure, and the digital worlds that emerge through these interoperable applications.

Taking a longer-term view, we believe that the metaverse will grow to encompass many non-digital industries. For example, it could help enable more efficient and transparent maintenance of property records in real estate, streamline complex financial transactions via blockchain, and optimise supply chains in manufacturing and agriculture. That is why investors should draw on multiple, cross-industry perspectives to identify the winners in this environment.

Pauline Llandric, portfolio manager AXA WF Metaverse,

The metaverse is really changing the way we live and work. Technology is increasingly being incorporated into everyday life. If "web 1.0" was about connecting people to information, and "web 2.0" was about connecting people through the social networking revolution, the metaverse is "web 3.0": connecting people to people, places and things.The metaverse is already considerable and growing fast. Studies estimate that the metaverse market, worth around $500bn in 2020, could grow to $685bn by 2022, and that the sector as a whole could reach almost $800bn by 2024, according to Bloomberg Intelligence, representing a compound annual growth rate of around 13%.At AXA IM, we have identified four main sectors in the metaverse: gaming, socialisation, work and enablement.

In our view, they present interesting long-term investment opportunities and, as with any long-term growth theme, we believe there will be winners and losers among companies exposed to the metaverse as the investment universe develops over time. As such, we believe stock selection is crucial. But what is certain is that the metaverse will continue to influence our lives, in ways we may not even be able to imagine, because we believe the metaverse can bring people together in new ways, with potential that is only just being tapped.

We believe we are in the early stages of a long-term trend that is growing rapidly, and that addresses a wide range of global businesses and potential investment opportunities.