Twitter will go public on Thursday as a mid-cap company, looking at a total market cap of $15 billion or more. Its IPO debut should raise nearly $1.75 billion in proceeds, but it still is nothing next to Facebook, whose market cap is hovering around $120 billion.
With all the attention put on Twitter recently, it’s easy to forget there have been 179 offerings this year – up from 131 in 2012. Internet and Tech IPOs account for 35 of these.
Everyone seems to be excited about Twitter. Many exchange-traded fund investors are looking to get a piece of the action too, but they won’t have a chance to get in on the exciting bid Thursday morning. As a rule, newly-issued securities can’t be added to an ETF right away.
But for the future, here are five ETFs that, according to Morningstar, will likely hold positions of Twitter when the time comes.
First Trust US IPO Index (FPX)
This $240 million fund uses an index of the top 100 largest and most liquid companies that have gone public in the last four years, but they can’t be added until a week after they begin trading. This lets their price stabilize after the initial offering. Twitter will probably make up 2 percent of this fund, while Facebook accounts for 11 percent.
Renaissance IPO ETF IPO (IPO)
This one-month old fund is worth just $28 million. It tracks a rolling two-year population of the top 80 percent of new public companies based on full market cap. Twitter will likely make up 1 percent of the index, but will be added sooner than First Trust, since it only requires a five-day waiting period.
Global X Social Media Index ETF (SOCL)
With $96 million in assets, this fund focuses highly on social-media companies, not necessarily new IPOs. Started in 2011, it tracks a market-cap-weighted Solactive index of 28 social media companies. They also have a five-day waiting period, but since they track an index based on free-float market cap, Twitter will probably make up a good 10 percent.
First Trust Dow Jones Internet Index (FDN)
At $1.64 billion, this very liquid fund generates at least half of its revenue from the Internet. But, since it requires at least three months of trading history, Twitter won’t be on their index until 2014. When it does, it will probably account for one percent since its Down Jones Internet Composite Index also taps stocks based on float-adjusted market cap.
PowerShares NASDAQ Internet Portfolio (PNQI)
This $216 million fund that holds 82 companies tracks a Nasdaq index of Internet companies listed on any major U.S. stock exchange. Twitter will probably constitute about 3 percent when they add it after the waiting period of at least three months.