Twitter Falls On Day 2, Next Stop ETFs

November 08, 2013

Renaissance’s IPO ETF, which came to market just three weeks ago, generated an enormous amount of interest right off the bat, gathering $31 million in the first few days of its life, as IndexUniverse’s Dave Nadig recently pointed out in a blog.

Twitter is likely to land in IPO rather quickly, assuming its IPO lives up the hype.

Beyond that, the social media giant may eventually land in other portfolios over a longer time period, e.g., in ETFs like the First Trust US IPO ETF (FPX | B-70). FPX tracks a market-cap-weighted index of the 100 largest U.S. IPOs over the first 1,000 trading days of each stock. Stocks must also meet other quantitative screens to make it into the index.

While the fund caps single-stock exposure to 10 percent, Facebook currently represents 10 percent of the portfolio. FPX, which has just over $241 million in assets, has seen gains of nearly 40 percent year-to-date.

The $215 million PowerShares Nasdaq Internet Portfolio (PNQI), tracking the modified market-capitalization-weighted Nasdaq Internet Index, is another fund that invests in the largest and most liquid U.S.-listed Internet-related companies, with two-thirds of the portfolio tied to information technology—names like Facebook, Google and Yahoo.

To be included in the portfolio, a security must have a market capitalization of at least $200 million, but it must also meet a certain minimum three-month trading volume, among other things, which suggests that Twitter shares might not be included in this fund until it’s been around long enough to meet all eligibility criteria.

PNQI is up 53 percent year-to-date, and allocates about 8.5 percent of the portfolio to Facebook—its second-biggest holding.


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