Overall, it has been tumultuous year for U.S.-focused Internet and social media exchange traded funds. Of the First Trust Dow Jones Internet Index Fund (NYSEArca: FDN), PowerShares NASDAQ Internet Portfolio (NasdaqGM: PNQI) and the Global X Social Media Index ETF (NasdaqGM: SOCL), only FDN is in the green on a year-to-date basis.
That does not mean these ETFs, each of which has a legitimate cult following, have been left for dead. While still lagging the the S&P 500, the trio has posted an average fourth-quarter gain of about 2.7%. [Internet ETFs: Alibaba vs. Amazon]
With Internet ETFs perking up, this could be the time to consider a new ETF avenue to Internet and social media stocks. The ARK Web x.0 ETF (NYSEArca: ARKW), which debuted on Sept. 30 is not only a new ETF, but an avenue for rethinking investing in Internet stocks.
Actively managed, ARKW is home to many of the Internet and social media stocks investors have come to expect from comparable ETFs. However, because the new fund is not limited by geography or industry classification, it is able to mix in other prominent names with the usual suspects.
For example, Amazon (NasdaqGS: AMZN), Facebook (NasdaqGS: FB) and Twitter (NYSE: TWTR) are among ARKW’s largest holdings. So is Apple (NasdaqGS: AAPL), which due to its classification as a technology stock, is absent from standard Internet and social media ETFs. [Returning to Tech ETFs]
Due to its geographic and industry flexibility, ARKW also sports one of the largest weights to Netflix (NasdaqGS: NFLX) among ETFs (4.6% as of Nov. 17), as well as allocations to several Chinese companies, including Alibaba (NYSE: BABA).
A more focused look at how ARKW goes about its business confirms this is anything but a run-of-the-mill Internet ETF. The new ETF “invests in companies that are transforming every sector of the economy, thanks to Internet enabled innovation. These changes cut across sectors and are accelerating thanks to social, mobile, and local technological breakthroughs, which are transforming consumer and business behavior,” according to New York-based ARK Investment Management.