Equities
How investors can participate in the AI Boom
James McDermottroe, looks at some of the latest trends in AI and how stocks in the portfolio are placed to take part in this Megatrend.
17 May 2024
Introducing the Invesco Metaverse and AI Fund
Shape the future. Invest in undervalued companies that help facilitate, create, or benefit from, immersive virtual worlds for both consumers and enterprises.
More than just hype
Technology plays an ever-growing role in our everyday lives. It has brought us significant economic growth in what some have classed as the start of the ‘fourth’ industrial revolution.
In our view, the metaverse is the next phase of this revolution – the next step in the evolution of the internet, a megatrend that we are only in the first innings of.
What are the opportunities in the metaverse?
Trillion-dollar market
Every year, USD 54 billion is spent on buying digital goods, which is almost double of money being spent on buying music.¹ Estimates suggest that the total addressable market for the metaverse could be USD 8-13 trillion by 2030.²
Immersive experiences
The Metaverse brings together all the elements of our digital age in immersive experiences that seamlessly integrate our digital lives and physical lives. This innovation has the potential to transform the way people interact with organisations, with use cases such as gaming, manufacturing, digital museums, and more.
Already making an impact
Real-world use cases for the Metaverse already exist today. Many companies are building virtual offices to support remote collaboration, for example, while manufacturers create digital twins of their factories that simulate the physical ones in real-time.
Three reasons to choose the Invesco Metaverse and AI Fund
We want to capture the growth of the Metaverse by investing in 30-50 stocks with exposure to the theme. We take a disciplined approach to valuation, with a focus on cash flow, balance sheet strength and business model sustainability.
We aim to be diversified across the different segments of the Metaverse value chain. At this early stage, opportunities are greater in those companies developing the supportive technologies and infrastructure required to enable Metaverse capabilities. However, investing in the Metaverse isn’t just about investing in tech and internet companies. It’s also about things such as network infrastructure, digital payments, or content.
The investment team have broad experience in multiple sectors and a deep understanding of enabling technologies and requirements for building and operating the Metaverse. They also cover multiple investment regions, which helps to bring a global approach to Metaverse investing compared to their typically US-focused competitors.
The investment concerns the acquisition of units in an actively managed fund and not in a given underlying asset.
Investment risks
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For complete information on risks, refer to the legal documents. The value of investments and any income will fluctuate (this may partly be the result of exchange-rate fluctuations) and investors may not get back the full amount invested. The fund may invest in certain securities listed in China which can involve significant regulatory constraints that may affect the liquidity and/or the investment performance of the fund. The fund invests in a limited number of holdings and is less diversified. This may result in large fluctuations in the value of the fund. As this fund is invested in a particular sector, you should be prepared to accept greater fluctuations in the value of the fund than for a fund with a broader investment mandate. As a portion of the fund may be exposed to less developed countries, you should be prepared to accept large fluctuations in the value of the Fund.
Explore the team's latest metaverse insights
Meet the team
The primary drivers of the fund’s positioning and performance are its named fund managers: Tony Roberts and James McDermottroe. However, collaboration is a key element of our investment culture, and they can source ideas and market insights from a wider group of regional experts.
Fund facts
The fund managers take a fundamental approach to investing and seek to find undervalued companies across the Metaverse value chain. They focus on the long term, and believe that share prices reflect fundamentals over time.
Fundamental approach
Innovative ideas and technologies
Long-term focus
How can we help?
Let us know using this form and one of our specialist team will quickly get back to you.
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FAQ
Generally, the Metaverse is a virtual world accessible through advanced technology, where users can interact with computer-generated environments and characters as if they were in a physical world. It’s a concept that was popularized by Neal Stephenson’s novel ‘Snow Crash’, and has gained attention from companies and organizations working to create social platforms, virtual economies, and gaming worlds. The Metaverse offers the potential for users to engage in various activities, from socializing and gaming to buying and selling goods and services using virtual currencies and is seen as a potentially revolutionary development in technology and communication.
The most direct way to invest in the Metaverse is through stocks of companies that are developing or utilizing Metaverse-related technology. Additionally, investing in cryptocurrencies such as Bitcoin, Ethereum, and Decentraland's MANA token can provide exposure to the virtual economy aspect of the Metaverse. These cryptocurrencies are used as payment and investment vehicles within virtual worlds, and their value can fluctuate based on the popularity and growth of the Metaverse.
Investors should keep in mind that the Metaverse is still a speculative and emerging market, and as such, investments in this space can be risky.
The Metaverse is a ground-breaking concept that has the potential to revolutionise the way we interact with the world and with each other. Imagine a future where physical distance is no longer a barrier to socialising, working, or learning. A world where immersive experiences and virtual economies provide endless opportunities for entertainment and economic growth. The Metaverse could even revolutionise healthcare by offering innovative and accessible treatments for mental and physical illnesses. It could expand our horizons and open possibilities that we can only dream of.
The Metaverse faces several challenges that need to be addressed before it can become a fully functional virtual world, such as:
· Technological limitations: The Metaverse requires advanced technologies, such as high-speed internet, powerful computing, and sophisticated virtual reality hardware, to create an immersive and responsive virtual environment. Current technology still has limitations that need to be addressed.
· Interoperability: The Metaverse must be able to seamlessly integrate different virtual environments, platforms, and devices to provide a seamless user experience. Currently, there are no industry-wide standards for interoperability, which can lead to fragmentation and hinder the development of a truly universal Metaverse.
· User safety and privacy: The Metaverse must ensure user safety, privacy, and security in a virtual environment, where harmful behaviour and content can be more difficult to regulate. The Metaverse must be equipped with the necessary safeguards and tools to prevent cyberbullying, harassment, and other forms of abuse.
· Legal and financial regulation: The Metaverse’s virtual economy raises new legal and financial issues that need to be addressed. There must be regulations in place to protect users and prevent fraudulent activity.
· Social and ethical concerns: The Metaverse must also address social and ethical concerns, such as the potential impact on physical world interactions, privacy, and surveillance. It must promote diversity, equity, and inclusion to ensure that everyone can benefit from the Metaverse’s potential.
The Metaverse's development will require collaboration and innovation across industries, government, and civil society to address these challenges. However, the potential benefits of the Metaverse are significant, and it remains an exciting development that could transform the way we interact with each other and the world around us.
Footnotes
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¹ Source: JP Morgan, 2022. Opportunities in the Metaverse.
² Source: Citi, 2022. Metaverse and Money. Using a device agnostic definition, analysts have estimated that the market could reach USD 8-13 trillion by 2030. This is assuming the Metaverse accounts for 30-40% of the digital economy, which itself could account for 20-25% of global GDP by 2030.
Important information
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This marketing communication is for professional investors and qualified clients/sophisticated investors only. Investors should read the legal documents prior to investing. Data as at 30 April 2023, unless otherwise stated. By accepting this material, you consent to communicate with us in English, unless you inform us otherwise. This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. Whilst the fund manager considers ESG aspects they are not bound by any specific ESG criteria and have the flexibility to invest across the ESG spectrum from best to worst in class. Views and opinions are based on current market conditions and are subject to change. For more information on our funds and the relevant risks, please refer to the share class-specific Key Information Documents/Key Investor Information Documents (available in local language), the financial reports and the Prospectus, available from www.invesco.eu. A summary of investor rights is available in English from www.invescomanagementcompany.lu. The management company may terminate marketing arrangements. Not all share classes of this fund may be available for public sale in all jurisdictions and not all share classes are the same nor do they necessarily suit every investor. If investors are unsure if this product is suitable for them, they should seek advice from a financial adviser.
EMEA2927961/2023
