Netflix: No Love From ETFs
ETFs do not love Netflix, despite what reports might have indicated.
Say what you want about Netflix (NFLX), but the company sure gets a lot of press. Sometimes it's good, sometimes it's bad. The bottom line is for a company with a $6.2 billion market cap, Netflix is quite popular.
Netflix is a lot of things. Cutting-edge tech company to some. A mid-cap growth story that still has legs to others. The list goes on. What Netflix is not, contrary to what some might lead you to believe, is a big deal among ETFs.
It's not, and that much has been noted recently. Only the First Trust ISE Cloud Computing Index Fund (SKYY) and the First Trust Dow Jones Internet Index Fund (FDN) hold somewhat noteworthy allocations to Netflix, and combined these two ETFs offer just 10% exposure to the stock, we reported.
That's what we said a couple of weeks ago. Add to the list of "Netflix ETFs" the PowerShares Nasdaq Internet Portfolio (PNQI), an ETF that doesn't even trade 20,000 shares per day. Netflix accounts for a staggering 4.33% of that ETF's weight, according to Barron's.
With a market cap of just over $6 billion, Netflix would make for an ideal candidate to be more than a bit player in any number of mid-cap ETFs. The SPDR S&P 400 Mid Cap Growth ETF (MDYG) would appear to be a logical home for Netflix, but even with over 230 stocks, MDYG has no room for Netflix, at least not at the moment.
The SPDR Dow Jones Mid Cap ETF (EMM) is home to almost 500 stocks. No Netflix. The iShares S&P MidCap 400 Growth Index Fund (IJK) has no Netflix. The iShares Morningstar Mid Growth Index Fund (JKH) allocates a whopping 0.66% to Netflix. Said differently, Henry Schein (HSIC) is more important to JKH than Netflix is.
And the one ETF where Netflix is sort of a big deal, the First Trust ISE Cloud Computing Index Fund, shares no intimate correlation with the stock at all.
Here's a brief list of lower market cap stocks that are arguably just as important, if not more important, among ETFs than Netflix is: Alpha Natural Resources (ANR), Couer D'Alene Mines (CDE), Carbo Ceramics (CRR), and Dendreon (DNDN). That's just a small list.
Some ETFs are excellent ways to get exposure to one or two individual stocks. We've explored that very theme with ETFs and Apple (AAPL). The Energy Select Sector SPDR (XLE) is a fine replacement for ExxonMobil (XOM) and Chevron (CVX). The iShares MSCI Brazil Index Fund (EWZ) offers plenty of exposure to Petrobras (PBR) and Vale (VALE).
Again, just a couple of examples that underscore the reality that Netflix, while a popular stock, is not important in the ETF world. No, ETFs do not "love" Netflix.
Editor's Note: This content was originally published on Benzinga.com by The ETF Professor.
Below, find some more great ETF and market content from Benzinga:
WisdomTree Emerging Markets Equity Income ETF Tops $3B In AUM (DEM, EEM, VWO)
By The ETF Professor
Keep up on economic news as it happens with Benzinga Pro – get your free trial here.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter