Stocks

2 ETFs Getting Hit by Twitter's Tumble

The Global X Social Media ETF and the Communication Services Select SPDR ETF are both getting hit due to large positions in Twitter, which has dropped 19% after releasing earnings.

The Global X Social Media ETF and the Communication Services Select SPDR ETF are both getting hit due to large positions in Twitter, which has dropped 19% after releasing earnings.

Twitter stock is down nearly 20% on an earnings miss, and that’s hurting some exchange-traded funds.

The Global X Social Media ETF (SOCL) counts Twitter (TWTR) as its top holding with 12% of its $124 million invested in 0.05% of the social media firm’s shares. The fund, which tracks the Solactive Social Media Total Return Index, is down 2% at $31.26 today, while the Nasdaq Composite has risen 0.7%.

Facebook (FB) is the fund’s second holding, soaking up nearly 11% of its assets. The fund had been lagging the S&P 500 for the year, with a 16% return as of Wednesday’s close. The index, including dividends, had returned 22% for the year through Wednesday.

The Communication Services Select SPDR ETF (XLC) has around 4% of its $6.2 billion in Twitter, making the social media firm the fund’s 11th largest holding. The fund had an impressive 23% year-to-date return through yesterday, Oct. 23, outpacing the S&P 500 by a little more than 1 percentage point. The fund contains a mix of new technology and communications companies such as Facebook, Alphabet (GOOGL), and Netflix (NFLX), along with more traditional firms such as Verizon (VZ), AT&T (T), and Walt Disney (DIS). The ETF is down 1.1% at $49.97 Thursday.

Among more diversified actively managed funds, the $2.5 billion Transamerica Capital Growth (TFOIX) fund run by veteran investor, Dennis Lynch, has nearly 6% of its portfolio in Twitter. The fund has a whopping 55% of its asset in technology holdings including positions in Amazon.com (AMZN), Spotify (SPOT), Slack (WORK), Alphabet, Uber (UBER), Netflix, and Snap (SNAP), and has earned a 4-star rating from Mornignstar reflecting past volatility-adjusted performance in the large growth stock fund category. For the past five years through Oct. 23, the fund has delivered a 13.4% annualized return, compared with the S&P 500 11.2% return. Lynch is a well-known growth investor who likes companies that dominate their industries by offering hard-to-replicate products or services, and sport high returns on invested capital. Lynch was the 2013 recipient of Morningstar’s domestic stock fund manager of the year award.

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

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