Buoyed by the likes of Google (NASDAQ:
), Priceline (NASDAQ:
) and Facebook's (NASDAQ:
) Lazarus act, just to name a few, Internet ETFs have been
stellar performers this year.
Not only has the First Trust Dow Jones Internet Index Fund
) gained more than 30 percent this year, but almost $627 million
of the ETF's $1.47 billion in assets under management have flowed
into the fund since the start of 2013.
Interesting Themes Among ETFs Hitting All-Time
FDN and rival funds usually make room for U.S. Internet
giants, such as the aforementioned stocks and others like Amazon
) and LinkedIn (NYSE:
). However, one Internet stock ETF investors should ensure their
funds have is not a U.S. name. It is China's Tencent Holdings
), that country's largest Internet company.
As of Monday, shares of Tencent traded in U.S.
over-the-counter markets surged 63 percent year-to-date. To put
that into context, shares of the largest Internet company in the
largest country in the world, though still a company many
Americans do not know about, have been nearly three times better
than Google than this year. Tencent has delivered more than
quadruple the returns of Amazon in 2013.
When it comes to Chinese Internet names, the ones that
usually pop up in Internet ETFs
are Baidu (NASDAQ:
), Sina (NASDAQ:
) and Qihoo 360 Technology (NASDAQ:
), among others.
Accessing Tencent via ETFs is not only possible, but the ETFs
that hold shares of the company usually feature substantial
weights to it. And that is a good thing. Tencent's revenue has
doubled in each of the past two years and its net income will
increase 25 percent,
according to Bloomberg
The Global X Social Media Index ETF (NASDAQ:
), mostly known as
the Facebook ETF
and perhaps the first ETF to hold Twitter when that company goes
public, is also home to a sizable Tencent allocation.
Tencent is SOCL's largest holding at 12.6 percent, or more
than 100 basis points above the weight the ETF gives to Facebook.
SOCL's weight to Tencent is nearly 300 basis points larger than
the weight to LinkedIn and more than double the fund's weight to
). So when investors try to figure out why SOCL is up 44.3
percent this year, some of the credit must go to Tencent.
Tencent is also the fourth-largest holding (nearly 9.7
percent) in another Global X ETF, the Global X NASDAQ China
Technology ETF (NASDAQ:
). The ETF is up nearly 40 percent year-to-date.
The Guggenheim China Technology ETF (NYSE:
) has surged almost 38.3 percent this with Tencent as its largest
holding with a current weight of nearly 12 percent. There are
multiple reasons why tech and Internet ETFs
have been leaders among China ETFs
this year and one of those reasons is clearly Tencent.
Even the new KraneShares CSI China Internet ETF (NASDAQ:
) gets it. KWEB, which is not yet two months old, features a
10.18 percent weight to Tencent, making the stock the new ETF's
With a market value of $98.7 billion, Tencent is nearly twice
the size of Baidu and not much smaller than Facebook.
For more on ETFs, click
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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