Facebook and Twitter power social-media ETF
The Global X fund has seen its fortunes rise along with those of its top investments.
Shares of the Global X Social Media ETF (SOCL) have seen a strong rise this week as the ETF attempts to close at its best level ever.
The move in the ETF is led by the big names that investors have become familiar with over the last few years.
Facebook (FB) hit a new all-time high this week as it traded as a member of the S&P 500 Index for the first time. The stock has more than doubled this year and is well off the 2013 low of $22.67.
With a forward P/E ratio of 50.6 and a PEG ratio of 2.1, the stock is fairly valued. However, the exuberance over the social media stock has picked back up recently and shares continue to attract new money. FB is the No. 1 holding of SOCL with an allocation of 10.6 percent.
The other big name in the sector, Twitter (TWTR) soared this week until Friday, when shares fell more than 7 percent. The questions about if and when TWTR will become profitable subsided as the stock became a momentum play in a sector that is red hot. TWTR is the fifth largest holding of SOCL and it makes up 5.8 percent of the portfolio.
A social media name not known to many U.S. investors is Yandex (YNDX). The Russian company is similar to what Google (GOOG) is to the U.S.; the company offers a search engine, email, maps, a marketplace, and other online and mobile services. The stock hit a new historic high this week, following in the footsteps of its American peers. From a valuation standpoint, YNDX is the most attractive with a PEG ratio of only 1.16. Due to its location, Russia, the valuation will almost always be lower than that of the U.S. peers. YNDX makes up 4.8 percent of SOCL and is the eighth-largest holding.
SOCL has been a big winner this year with a gain of 63 percent. Looking ahead to 2014, it could be an exciting year for social media and SOCL. There are rumors that several big name companies in the sector could go public, allowing SOCL to buy up shares once they are traded on a major stock exchange. A few names in the rumor mill are Pinterest, Shazam, and Airbnb.
The ETF has $113 million in net assets and charges an annual expense ratio of 0.65 percent.
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