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How President Obama's Net Neutrality Proposal Can Affect ETFs

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How President Obama's Net Neutrality Proposal Can Affect ETFs
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President Barack Obama expressed his concern with protecting an open Internet this week.

“I am asking for an explicit ban on paid prioritization,” Obama said in a statement. The news caused broadband providers such as Time Warner Cable Inc (NYSE: TWC) and Comcast Corporation (NASDAQ: CMCSA) to drop significantly.

The proposal would require there to be no blocking of websites, no slowing of Internet content and no deals that let companies pay for faster delivery of their content. The passing of legislation such as this would greatly affect the broadcasting and telecommunication industry, effectively turning them upside down.

Highlighted below are a number of ETFs that were affected by Obama’s announcement.

Related Link: President Obama Pushes For Net Neutrality

Consumer Discretionary Select Sector SPDR ETF

The Consumer Discretionary Select Sector SPDR Fund (NYSE: XLY) follows 86 publicly traded companies across 12 industries, with the media sector making up 30 percent, the specialty retail sector at 19 percent and the hotel, restaurant and leisure sector comes in at 14 percent.

The top individual holdings include:

  • Comcast with a 6.8 percent allocation
  • Walt Disney Co making up 6.8 percent
  • The Home Depot, Inc. coming at 6.3 percent
  • Time Warner is the seventh-largest holding in XLY with a 3.2 percent weight.

The ETF is up 7 percent in the last 12 months and 6.9 percent over the last six months. The ETF lagged the market on Monday after the news hit the wires.

Related Link: Web Giants Sign Net Neutrality Letter, But Apple Is MIA

PowerShares Dynamic Medial Portfolio

The Powershares Dynamic Media Portfol. (ETF) (NYSE: PBS) could also be directly affected by the new proposed Internet policy. It tracks 30 publicly traded companies across four industries with consumer discretionary at 74 percent and information technology at 20 percent as the most heavily weighted industries.

The top individual holdings include:

  • DIRECTV making up 5.2 percent of the portfolio
  • Facebook Inc with a 5.2 percent holding
  • Disney coming in at 5.1 percent

Time Warner is the sixth-largest holding at 5 percent. DISH Network Corp and Cablevision Systems Corporation are also top holdings in the ETF that have direct ties to the potential implications of a net neutral Internet.

PBS is up 2 percent over the last year and up 5 percent over the last six months. The ETF was able to rally back on Monday after digesting the news.

This is one of President Obama’s largest and most widespread proposed bills in his legislation. Massachusetts Senator Ed Markey commented on the proposal by saying, "When the leader of the free world says the Internet should remain free, that’s a game changer."

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