Daily ETF Watch: A Fund That Tracks ‘Buzz’

January 12, 2016

A recent filing from Sprott Asset Management, via ALPS’ exemptive relief, outlines plans for an ETF that will track an index that selects its components based on positive sentiment about them on social media outlets. The Sprott Buzz Social Media Insights ETF will track a benchmark provided by Buzz Indexes.

According to the prospectus, the index relies on a proprietary model to rank companies, evaluating them based on the magnitude of the positive sentiment and the volume of the chatter. The information is gathered from a variety of types of venues, including blogs, video-sharing sites, wikis and podcasts, among others. Sites such as Twitter, Facebook, LinkedIn, YouTube, Flickr and Reddit are also canvassed.

Ultimately, the index covers the 25 eligible companies with the most positive sentiment, as determined by the model, and weights them according to a scoring methodology. Companies must meet liquidity requirements, be listed on a U.S. exchange and have a market capitalization of at least $5 billion to be considered for inclusion, the prospectus said. The index is rebalanced and its component list is reconstituted on a monthly basis.

The concept is similar to the indexes based on Twitter chatter that were launched by Market Prophit a while back. More recently, Exchange Traded Concepts filed for the CrowdInvest Wisdom ETF, which would allow users of the CrowdInvest Internet Platform to vote on its index’s components.

When you get right down to it, funds like Global X’s Guru ETF (GURU | B-67), which selects its components based on the holdings of leading hedge funds, are also designed in a similar vein.

The new filing did not include a ticker or expense ratio, but it did indicate the fund would list on the NYSE Arca.

Contact Heather Bell at [email protected].

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