Snap Inc (NYSE: SNAP), the social media company behind the popular Snapchat app, just released its initial public offering to much fanfare, and an exchange traded fund is already snapping up the opportunity.
The First Trust US Equity Opportunities ETF (NYSEArca: FPX), which was previously expected to include SNAP in its upcoming quarterly rebalance on the close of March 17, incorporated SNAP into its portfolio after the underlying index provider exercised discretionary power to add the Snapchat owner at the close of business March 2 due to “extraordinary circumstances,” reports Aparna Narayanan for Investor’s Business Daily.
Nevertheless, potential investors should keep in mind that SNAP only makes up 0.3 of FPX’s underplaying holdings. Ryan Issakainen, ETF strategist at First Trust, though, said that the weighting could change at the rebalance. FPX’s underlying portfolio is weighted by a float-adjusted market capitalization and a recent surge in SNAP could cause the adjusted weighting to increase.
SNAP shares surged 40% on its first day of trading and added another 10.7% Friday.
FPX tries to reflect the performance of the IPOX Global Composite Index, which is comprised of the top 100 companies ranked quarterly by market capitalization. The underlying index uses a 10% cap on all constituents and includes the largest 100, typically best performing and most liquid U.S. public offerings, or IPOs.