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ETFs in Focus on Cisco's Acacia Buyout Deal


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Another M&A deal is on the horizon with network gear maker Cisco Systems CSCO agreeing to buy optical component maker Acacia Communications Inc ACIA for $2.84 billion or $70 per share in cash. The per-share price represents about 46% premium to Acacia's closing price on Jul 8. The deal, pending regulatory approvals, is expected to close during the second half of Cisco's fiscal 2020.

Acacia designs and manufactures high-speed, optical interconnect technologies while Cisco provides a variety of products vital to computer networking. The combination will bolster Cisco's optical system portfolio and offer it a competitive edge. The acquisition will also allow Cisco to build on the strength of its switching, routing and optical networking portfolio to address customers' most demanding requirements (read: Best ETFs to Invest in 5G Theme ).

Following the merger announcement, shares of Acacia surged 35.1% to new highs, crushing its average volume, as nearly 13.2 million shares moved hands compared with 803,000 shares on average. Meanwhile, shares of CSCO gained 0.3%.

ETFs in Focus

The news has put the spotlight on a number of ETFs, mostly with high exposure to Cisco, which could be the best ways for investors to tap the opportunity. Investors should keep a close eye on the movement of these ETFs over the coming weeks. Below, we highlight five ETFs having the largest allocation to this network giant:

iShares U.S. Telecommunications ETF IYZ

This fund follows the Dow Jones U.S. Select Telecommunications Index and offers exposure to 42 American companies that provide telephone and Internet products, services and technologies. Cisco occupies the second position with 22.2% of the assets. The ETF has AUM of $449.2 million and trades in average daily volumes of 474,000 shares. It charges 43 bps in annual fees and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: ETFs Set to Gain on Cisco's Robust Results ).

iShares North American Tech-Multimedia Networking ETF IGN

This ETF provides concentrated exposure to domestic multimedia networking securities by tracking the S&P North American Technology-Multimedia Networking Index. Holding 22 securities in its basket, Cisco takes the third spot with 8.4% allocation. The product has accumulated $117.5 million in its asset base while seeing a lower volume of around 49,000 shares a day. Expense ratio comes in at 0.47%. The fund sports a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.

First Trust NASDAQ Technology Dividend Index Fund TDIV

This fund provides exposure to dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $981.4 million in its asset base and trades in moderate volume of about 109,000 shares per day. The ETF charges 50 bps in annual fees and holds about 93 securities in its basket. Of these firms, CSCO occupies the fourth position, making up roughly 8% of the assets (read: 5 Market-Beating Dividend ETFs of 1H ).

First Trust Nasdaq Cybersecurity ETF CIBR

This ETF follows the Nasdaq CTA Cybersecurity Index, which measures the performance of companies engaged in the cyber security segment of the technology and industrials sectors. It has accumulated $939 million in its asset base. The fund charges 60 bps in annual fees and trades in average daily volume of about 173,000 shares. In total, the product holds 44 stocks in its basket with Cisco taking the top spot at 6.3%.

Invesco Dynamic Networking ETF PXQ

This fund follows the Dynamic Networking Intellidex Index, holding 30 securities in its basket. Of these, Cisco is the seventh firm, accounting for 4.9% share. The fund is relatively unpopular and illiquid in the broad technology space with AUM of $68.4 million and average daily volume of about 14,000 shares. It charges 63 bps in annual fees and has a Zacks ETF Rank #2 with a High risk outlook.

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Cisco Systems, Inc. (CSCO): Free Stock Analysis Report

Acacia Communications, Inc. (ACIA): Free Stock Analysis Report

iShares North American Tech-Multimedia Networking ETF (IGN): ETF Research Reports

Invesco Dynamic Networking ETF (PXQ): ETF Research Reports

First Trust NASDAQ Technology Dividend Index Fund (TDIV): ETF Research Reports

iShares U.S. Telecommunications ETF (IYZ): ETF Research Reports

First Trust NASDAQ Cybersecurity ETF (CIBR): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , ETFs
Referenced Symbols: CSCO , ACIA , IGN , PXQ , TDIV



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