Franklin Templeton is embarking on an ambitious expansion of its Metaverse ETF, signaling a strategic shift towards broader technological exposure. The ETF, previously known as the Franklin Metaverse UCITS ETF (METU), will undergo a significant transformation, evolving into the Franklin AI, Metaverse and Blockchain UCITS ETF.

The renamed fund, which will continue to track the Solactive Global Metaverse Innovation index, will now incorporate additional exposure to artificial intelligence and blockchain technologies. This expansion will see the portfolio expand to encompass a total of 75 companies, with the addition of 15 new entities.

In a move aimed at streamlining the investment focus, the index will undergo a thematic reorganization, consolidating from seven categories to four. These encompass the metaverse ecosystem, blockchain technology, digital asset platforms, and AI applications and services, reflecting a more nuanced approach to technological innovation.

Despite these comprehensive changes, the ETF's fundamental investment objective remains unaltered, continuing to offer exposure to technologies driving the development of products and services within the metaverse, while also supporting the advancement of blockchain technologies. These modifications are slated to come into effect on June 7, marking a pivotal moment in the ETF's evolution.

At present, the top three holdings of METU include industry giants such as Nvidia (8.2%), Meta Platforms (5.4%), and Coinbase Global (5%), underscoring the fund's focus on leading players within the technology sector.

Franklin Templeton's foray into the metaverse ETF space commenced with the launch of METU in September 2022. Despite conservative beginnings, assets under management have steadily grown to reach $3.6 million since its inception, signaling growing investor interest in thematic investment strategies.

The move by Franklin Templeton comes amidst a broader trend of innovation within the ETF landscape. Competitors such as HANetf have recently overhauled their metaverse ETFs, adopting a 'Web 3.0' strategy to capitalize on emerging trends and diversify sector exposure. However, not all ventures have been successful, with Roundhill Investments exiting the European ETF market last October, highlighting the challenges and volatility inherent in thematic ETFs.

In the United States, Franklin Templeton boasts an impressive lineup of 60 ETFs, managing a total of $17.6 billion in assets. The company's diverse ETF offerings span various sectors, with the Franklin FTSE Japan ETF (FLJP) emerging as the largest, boasting $2.09 billion in assets under management.

Looking ahead, Franklin Templeton's expanding ETF offerings underscore its commitment to embracing technological innovation and catering to evolving investor preferences in an ever-changing market landscape. In a recent episode of Talk ETFs on etf.com, Franklin Templeton global ETF head Patrick O'Connor shed light on the company's strategic vision and its continued dedication to providing innovative investment solutions.