New ETFs Target Internet IPOs, Social Media

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 |  Includes: EIPL, EIPO, FDN
by: Tom Lydon
The exchange traded fund business is scrambling to launch products that target social media firms, one of the market’s hottest investment trends.

UBS recently listed exchange traded notes (ETNs) that track an index of initial public offerings in the Internet sector. The ETRACs Internet IPO ETN (NYSEArca: EIPO) will track an index that is linked to newly-minted Internet stocks, such as LinkedIn (NasdaqGS: LNKD) and Pandora (NYSE: P). The Monthly 2X Leveraged ETRACs Internet IPO ETN (NYSEArca: EIPL) provides a monthly compounded double exposure to the same indexes performance.

“There is a tremendous amount of investor interest in the current generation of Internet-related companies,” said Christopher Yeagley, managing director and U.S. head of equity structured products at UBS. “And now investors have a convenient way to access these stocks in a transparent, low-cost exchange traded product. Moreover, as new Internet-related companies go public, investors in these ETNs will gain exposure to them within weeks after their IPOs, provided they meet certain market capitalization and other requirements.”

Separately, Global X has filed to create a social media ETF, a niche fund that deals with companies involved with social networking, file sharing and web-based media applications. Global X Social Media ETF will track the Solactive Social Media Index. However, the planned ETF’s expense ratio and ticker haven’t been disclosed yet.

Cinthia Murphy for Index Universe reports that this fund joins the ranks of such niche funds like First Trust’s Dow Jones Internet Fund (NYSEArca: FDN), which has garnered $725million in assets.

“Social media companies face risks related to the technology industry,” the company said in a filing. “Technology company stocks, particularly those involved with the Internet, have experienced extreme price and volume fluctuations, that often have been unrelated to their operating performance.”

Tisha Guerrero contributed to this article.