A third fund likely to add Twitter is the First Trust U.S. IPO Index Fund (FPX). IPOs can be added on the first day of the next calendar quarter and remain in the fund for their first 1,000 days of trading. Based on current numbers, the Twitter IPO would be about the 20th largest holding, and so only have around a 1% weight, which would be less likely to move the needle on the fund. That is unless, of course, the stock goes on to be wildly successful and grows into a larger weighting in the fund.
FPX is a broad-based fund that potentially serves as a core equity holding. FPX has reasonably diversified sector exposure, with 26% in consumer discretionary, 21% in tech and 16% each in energy and health care. It also has exposure to industrials, financials and staples, but has little to no exposure in materials, utilities and telecom.
The bull case for Twitter simply revolves around the extent to which it provides a means for media outlets, companies, athletes and performers to communicate with its audience, customer base or fan base in a way that previously did not exist. Obviously, friends and colleagues can also communicate with each other.
The three ETFs profiled above offer different levels of potential involvement in a much-anticipated IPO. There can be no assurances that Twitter will actually come public and no guarantee that it would be included in any ETF. However, if it does, it will be eagerly anticipated and widely followed, which makes it very likely that ETF providers will want to include it in their funds, where appropriate.At the time of publication the author held no positions in any of the stocks mentioned. Follow@randomroger This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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