ETFs for Google, General Electric

Whether you favor Google's rise to dominance or GE's resurrection, you can gain exposure to either corporate giant through these funds.

By TheStreet Staff Oct 21, 2010 10:18AM

By Don Dion, TheStreet

 

Given the company's massive pile of cash and numerous acquisitions throughout 2010, more market commentators are looking to Google (GOOG) as the General Electric (GE) of the 21st century. Using exchange-traded funds, you can gain ample exposure to either company.

 

Throughout 2010, Google has been on a remarkable shopping spree. Often considered a one-trick pony, the tech Goliath has taken a number of steps in hopes of expanding beyond the search engine business, which has traditionally been its bread and butter.

 

Since February, the company has bought at least one name a month, expanding its reach into various outlets. Companies acquired 2010 are in industries such as social gaming, photo editing, advertising and travel technology.

Google's Android operating system is quickly gaining market share among smart-phone users, pitting it head to head with other wireless industry leaders such as Apple (AAPL).


The company is also becoming increasingly involved in the alternative-energy realm as well. Google recently announced that it was teaming with a collection of other companies to invest $5 billion in a massive offshore wind farm slated to be built along the East Coast, stretching from New Jersey to Virginia.

 

ETF investors confident in Google's chances of becoming the next big U.S. conglomerate should look to the First Trust Dow Jones Internet Index Fund (FDN). This fund is designed to track a basket of companies leading the way in the Internet industry.

 

Google is the fund's top holding, representing nearly 12% of the fund's total index. Other holdings include Amazon (AMZN), Salesforce (CRM) and Netflix (NFLX).

 

General Electric has long been a household name when it comes to U.S. conglomerates. However, the company has struggled to regain its footing after nearly collapsing amid the financial meltdown leading up to the most recent global economic crisis.

 

In order to put these dark times behind it and return to strength, GE has taken steps to realign its business back toward its industrial roots. This process has included paring back its financial arm, GE Capital, and making an effort to shed its NBC Universal branch. Now it appears as though General Electric is back in the buying mood as well.

Confidence is on the rebound for GE, with CEO Jeff Immelt recently saying the worst is behind it. Another top executive offered cautious optimism for the company's future, explaining that it has the capability to spend $30 billion on M&A activity over the next two to three years.

 

In October the company has put its money to work, spending $3 billion to purchase gas engine maker Dresser Inc. It will be interesting to see where GE will turn to next on its path as it seeks to bounce back.

 

The strongest play for investors looking for exposure to General Electric is the Industrial Select Sector SPDR Fund (XLI).

 

XLI tracks a collection of household industrial names. GE represents the fund's largest position, accounting for more than 10% of the fund's portfolio. Other positions include UPS, 3M (MMM), Boeing (BA) and Caterpillar (CAT).

 

Whether you favor watching the ascension of Google or the resurrection of GE, the future of U.S. conglomerates appears promising.


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