NEW YORK (Dow Jones)--Investors in the first exchange-traded fund for social media--set to be launched on Tuesday--will not only buy into Groupon Inc. (GRPN), LinkedIn Corp. (LNKD) and similar companies, but will also get significant international exposure, particularly to China.
The Global X Social Media Index exchange-traded fund is expected to start trading Nov. 15 on the Nasdaq, under the symbol SOCL. Tracking 25 stocks, including some of this year's most closely watched initial public offerings, the fund aims to be "a pretty simple way to make sure you're exposed to the full sector," said Global X Funds chief executive Bruno del Ama in an interview. It also promises a more volatile ride than broader technology ETFs. During Friday's light-volume stock-market surge, the Nasdaq Composite gained 2%, but LinkedIn rose 2.7%, characteristic of the exaggerated moves seen in brand-new tech stocks that face considerable growth expectations.
Investors' hopes for social-media stocks have surged this year amid well-received initial public offerings such as LinkedIn's, but the public markets still don't have Facebook Inc. and Twitter Inc., the twin heavyweights of U.S. social media.
That is one reason the Global X ETF will have a surprisingly high international exposure. At least for the time being, there is more exposure to Chinese social-media companies than to Silicon Valley, since large social-media companies are in several cases more established in public markets overseas.
-By Brendan Conway, Dow Jones Newswires
-By Brendan Conway, Dow Jones Newswires
The ETF is slated to add new social-media stocks after their IPOs, and won't be able to buy them beforehand, meaning it won't benefit from the first-day pop seen in several of this year's social-media offerings. LinkedIn soared 109% on its first day of trading in May. It will be seeded with $1.5 million in capital ahead of Tuesday's open, a Global X representative said.
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