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Printed: 05 July 2022 10:04 PM

News

02 Mar 2022 - Welcome to the Metaverse
By: Insync Fund Managers

Welcome to the Metaverse

Insync Fund Managers

February 2022


Introducing the Metaverse - the successor to the internet

Welcome to the Metaverse! A place where digital (Augmented Reality and Virtual Reality) converge with our physical lives. Creativity is limitless with location-defying worlds bringing people together. Be present inside the internet and not just looking at it. It is the next evolution of online experiences (Web 3.0). Furthermore, you can make money in it, and not just spend money on it. 

The phrase metaverse was coined a long time ago by Neal Stephenson, in his 1992 science -fiction novel Snow Crash, set in a near future, in which the virtual world and the physical world were inextricably interconnected.

Epic Games, Microsoft, Facebook and SK Telecom are seriously embracing this development. Burberry, Coca-Cola, and Visa are just a few of many consumer brands racing to be part of it. 

The Metaverse can be divided into 3 broad categories:

  • MetaLives - the rise of virtual possessions, the close connection between digital access and health and wellbeing, and technology's broader role in creativity and lifestyles.
  • MetaSpaces - the growing popularity of virtual venues and blended virtual/real world spaces, redefining home, events, and holidays.
  • MetaBusiness - the uplift in "gamevertising" and emergence of new retail frontiers.

As COVID-19 restrictions ease, the acceleration of technology and its prominence will continue, boosted into greater acceptance by the pandemic. 

Investing in the Metaverse

When investing in a powerful new trend, a systematic framework is important to generate outsized returns whilst controlling risk. This is what Insync has in place.

We are in the early stages of the Metaverse journey. Like a lot of new innovations and trends, one can invest too early in the adoption phase. Most companies that are built primarily around the early phase of a trend are typically unprofitable and become unsustainable businesses, creating losses for investors.

Caution! The 'technology bubble' of 2000 provides an important case study of investing in a very early stage of the adoption phase. Most investors back then ended up losing over 80% of their capital. Innovative new technologies and trends take time to evolve into profitable business models. It was well over a decade before profitable winners from the internet emerged.

Facebook is well positioned to win in the Metaverse

The smarter way to invest in the Metaverse today is to look at existing highly profitable companies positioning themselves to both drive the trend and future-proof their business against potential disruption. 

Facebook's advantages are immense. It has more users, daily usage and user-generated content created each day than any other platform. It has the second largest share of digital advertising spend, generating billions in cash and free cash-flow.

With thousands of world-class engineers, and high-conviction from a founder with majority voting rights, it has the right stuff to succeed. It is a well-known fact that founder led companies tend to outperform. 

Facebook's Metaverse-oriented assets are growing rapidly.
Alongside the Oculus goggles are patents for semiconductor and brain-to-machine computing interfaces. Almost one in five Facebook employees are now working on VR and AR as it invests deeply to help shape what they believe is going to be the next major leap in computing platforms. Facebook's focus is to see it develop in a way that is fundamentally about people being present with each other and coming together (social aspect).

Facebook and the Metaverse workforce 
Teleportation, holograms, and roaming avatars--this isn't the latest sci-fi movie, this is the future of work. Covid has reshaped the future of work, pointing to a flexible hybrid model in the services sector in particular.

"We anticipate never going back to five days a week in the office. That seems very old-fashioned now," stated Alan Jope, CEO of Unilever. 

This thinking is aligned with employee expectations shaped from the pandemic: more than 70% want flexible and remote work to continue, according to a Microsoft 2021 survey.

This year Facebook introduced Horizon Workrooms, a "collaboration experience". It allows people to collaborate, communicate and connect through VR. The idea is for the experience to feel as close to in-person as possible, enabling "lifelike" conversations. Oculus will allow users to teleport from one place to another without moving from their sofa--not only for gaming and entertainment, but also for work. 

Facebook meets our stringent tests for the ideal 'quality compounder' business. It is also present across several of our Megatrends and is an emerging leader in harnessing and profiting from the Metaverse. 


Funds operated by this manager:

Insync Global Capital Aware FundInsync Global Quality Equity Fund


Disclaimer

Equity Trustees Limited ("EQT") (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for the Insync Global Quality Fund and the Insync Global Capital Aware Fund. EQT is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT). This information has been prepared by Insync Funds Management Pty Ltd (ABN 29 125 092 677, AFSL 322891) ("Insync"), to provide you with general information only. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither Insync, EQT nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product.

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