This ETF is designed to measure the performance of U.S. companies that have recently gone public––specifically, those that are within their first 1,000 trading days after an IPO. The underlying index consists of the 100 largest stocks that fall into that window, utilizing total market capitalization to make that calculation.
With an expected market cap of around $18.1 billion, that would put Twitter above the fund’s median market capitalization of $4.0 billion, but well below the max market cap of $119 billion. New IPOs are added to the underlying index after their seventh trading day, which means that Twitter could be found in FPX as early as November 18.
First Trust Dow Jones Internet Index Fund (FDN)
This ETF tracks the Dow Jones Internet Index comprised of companies that generate at least 50% of their revenues from the Internet. Currently, the fund’s top holdings include Google, Amazon.com, eBay and Priceline.com, as well as social media companies LinkedIn and Facebook [see 5 ETF Underdogs Beating The Market].
To be eligible for inclusion, IPOs must have a minimum of three months’ trading history, meaning Twitter would not be eligible until mid-February, 2014. The index composition is reviewed each quarter, with rebalancing taking place after the close of trading on the third Friday of March, June, September, and December. Therefore, expect FDN to add Twitter after the close of trading on March 21, 2014.
Daniela Pylypczak writes for ETFdb, which offers a comprehensive and original ETF database and analytical consulting services for advisors and investors, as well as a free newsletter. Learn more about their services by visiting ETFdb.com. Disclosure: the author had no positions in the securities named in this article at the time of writing.