Hardly any other segment of the population knows how to market itself better than the celebrities of our time. Now the stars and starlets have discovered a new industry for themselves: the Metaverse. One of the pioneers is Paris Hilton. The billionaire It-girl recently launched her own digital business on the online gaming platform Roblox. The launch of "Paris World," where users can purchase a range of virtual experiences, is another step towards making the metaverse socially acceptable.
The Metaverse is an imaginary, fully developed 3D virtual world that contains all kinds of content. Gaming platforms like Roblox, where anyone with their own avatar can connect online with friends from anywhere in the world, are the first step in this direction. But there are already more applications such as virtual concerts or real estate deals via NFTs (non-fungible tokens). The latter can be used to purchase virtual property, for example. Already, several hundred million dollars worth of NFT land sales have been transacted on platforms such as The Sandbox, Decentraland, CryptoVoxels and Somnium Space.
According to Bloomberg Intelligence, the metaverse market is already worth billions. While the market was already worth around USD 500 bn in 2020, the cyberspace business is expected to grow to almost USD 800 bn by 2024, which corresponds to an average annual growth rate of 13.1%. According to forecasts, the total size of the metaverse market could even reach 2.7 times the pure gaming software, services and advertising revenues.
Many companies have their sights set on this big pie, but they are also taking different approaches. Microsoft, for example, recently launched Mesh, a communications platform that allows users to virtually connect with each other and interact with holograms in space thanks to mixed reality features. Chip specialist Nvidia, in turn, supplies the important GPU chips to give the Metaverse the necessary speed. The US company also has its own Metaverse called Omniverse, which is used as a simulation platform for engineers. Meta Platforms, formerly Facebook, on the other hand, dreams of people equipped with virtual reality goggles from its own Oculus brand meeting and exchanging ideas as 3D avatars in its virtual worlds. In doing so, the company hopes to take social technologies to a new level. Meta has set itself no less a goal than to reach one billion users in the long term.
All the companies mentioned are part of the Solactive Developed Markets Metaverse Index. But that's far from enough; in total, the barometer includes 51 international corporations that may benefit from the adoption and use of technologies around the Metaverse. These include industries such as augmented and virtual reality, digital infrastructures, gaming, and digital payments. From a regional perspective, the U.S. is the heavyweight with an index share of nearly 83%. The top 3 ranks are currently occupied by Apple, Microsoft and Amazon. Since its inception in December 2016, the USD-denominated barometer has advanced by a respectable 228.3%, which corresponds to an annual average return of 26.1%. As the index is the net total return variant, the net dividends of the companies are included in the price calculation.
The index calculated by Solactive forms the basis for the Leonteq Metaverse 5% Decrement Index. Leonteq's underlying still contains an embedded synthetic dividend of 5%, which is used to partially offset the costs of the structured products. The performance of the index is impressive: Over the past five years, the strategy barometer performed significantly better than a benchmark portfolio of global large caps. Only last year did the Metaverse selection lose out. However, when added up over the entire period, it outperformed by more than 50 percentage points.
For conservative investors, Leonteq has launched a bonus certificate on the Leonteq Metaverse 5% Decrement Index. The product offers full participation in the underlying at the end of the term - and for an unlimited period. While upwards no cap is built, on the bottom side a low barrier at 55% of the starting value was drawn into the structure. The comfortable risk buffer protects against losses to a greater extent, which is definitely an advantage in view of the current correction phases on the stock markets. During the term, the bonus certificate allows the underlying to run freely, i.e. the barrier is not active. It will only be activated at the final fixing in three years. If the Leonteq Metaverse 5% Decrement Index is then at least at or above the threshold, no losses are to be feared. Only if the underlying price closes below the barrier, the investment ends in negative territory.
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