Market Overview

The Facebook Effect: More Than Just One ETF


Those not living in a cave know that Facebook has filed for an initial public offering and that the mere filing has been great news for one ETF in particular. Simply put, Facebook fervor has lit a fire under the Global X Social Media Index ETF (Nasdaq: SOCL).

Today, SOCL is flirting with $15 and with more than three hours left in the trading day, nearly 120,000 shares have changed hands in the fund, marking the fifth consecutive day of rising volume for the ETF. So the world knows the Facebook IPO has been a boon for SOCL and to a lesser extent a big tech ETF like the PowerShares QQQ (Nasdaq: QQQ).

However, there are some other ETFs that are arguably experiencing a Facebook effect of their own and a couple have a decidedly non-U.S. feel to them. Consider the following:

Guggenheim China Technology ETF (NYSE: CQQQ) As has been noted CQQQ is off to a stellar start this year. Narrowing the time frame down to the past five trading days, we find this unheralded ETF is up over 4% and while its doubtful Facebook, which is currently banned in China, will find its way to CQQQ anytime soon after the IPO, the ETF does a social media feel to it.

Tencent, Baidu (Nasdaq: BIDU) and Sina (Nasdaq: SINA) represent over 28% of CQQQ's weight and Renren (NYSE: RENN), China's answer to Facebook, is also found among CQQQ's holdings.

Global X NASDAQ China Technology ETF (Nasdq: QQQC) CQQQ and the Global X NASDAQ China Technology ETF might be easily confused given the similar tickets, but there are stark differences between these two funds. The similarity is that Facebook probably won't be holding in either ETF anytime soon. Then again, both may be benefiting from news of Facebook's IPO. As Global X CEO Bruno del Ama told Benzinga earlier this week, social media is a global phenomenon.

Tencent, Baidu, Sina and a couple of others give QQQC a bit of a social media feel, but the ETF is more aligned with traditional tech. That said, there's no denying the fact that the ETF has been a winner since last week when news of Facebook's IPO was initially reported.

First Trust Dow Jones Internet Index Fund (NYSE: FDN) Here's where the stretch begins. The First Trust Dow Jones Internet Index Fund, a popular tech ETF in its own right, isn't home to many social media names. At least not yet. Google (Nasdaq: GOOG) accounts for 9% of FDN's weight, but after that, social media exposure here is almost zero. No LinkedIn (NYSE: LNKD), no Zynga (Nasdaq: ZNGA), etc.

Still, Facebook could eventually be a logical addition to FDN's lineup and the ETF has risen over the past five trading days.

First Trust US IPO Index Fund (NYSE: FPX) The First Trust US IPO Index Fund is up slightly since last Friday, so it can be said there hasn't been much of a Facebook effect here. However, Facebook would make for a logical addition to FPX. It's just a matter of when.

FPX has some standards that need to be acknowledged before crowning this ETF a legitimate Facebook IPO play. The ETF's index is a rules based value-weighted index measuring the average performance of U.S. IPOs during the first 1000 trading days. Index constituents are selected based on quantitative initial screens, according to the First Trust Web site.

Not to mention, FPX's i will not include stocks that gained over 50% in their first day of trading so if that happens with Facebook, it may not find its way into FPX. Even if Facebook doesn't jump 50% in its first trading day, it might be a while before it's included in FPX.

The ETF holds plenty of stocks that are far removed from their IPO dates, multiple months and more than a year in some cases. Among recent IPOs, FPX holds Michael Kors (NYSE: KORS), but doesn't yet feature LinkedIn, Groupon (Nasdaq: GRPN) or Zynga among its 100 holdings.

Posted-In: Long Ideas News Sector ETFs Short Ideas Specialty ETFs Emerging Market ETFs Offerings IPOs Best of Benzinga


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