TETF comments on Facebook’s fall from grace

Mike Venuto (pictured) and his team at TETF.index, the index that follows the ETF industry has published a note on Facebook.

He writes that it’s been a tough month for Facebook, Inc. following its historic one-day market decline. After a disappointing second-quarter revenue, mixed with public criticism and scandal, investors have been nothing short of disenchanted, but Venuto asks how much does the ‘Facebook factor’ impact the ETF industry?
 
Mike Venuto and his team did some research and focused their latest newsletter update on the topic of transparency. By using the Facebook stock (FB) as a model, the piece presents the benefits and stock locator tools available for specific stock selection in an ETF and how exposure and influence affect stock price.
“According to our ETF Think Tank software, 5.1 per cent of all FB shares are held by ETFs and 1.14 per cent of all US equity ETF assets are invested in FB.  Considering the recent controversy surrounding the company, FB’s effect on ETFs can be significant,” Venuto says.
 
The team also took a look at an ETF that exited the FB stock just before the downturn, showing how proactive research, access to data, and the ETF structure could help before a decline.
 
“The ACSI ETF exited a 2.8 per cent FB position in July, due to deterioration in customer opinions on both the Facebook and Instagram brands.  This is a great example of an innovation in using the ETF structure to democratise access to data that has historically been only available to hedge funds,” writes Venuto.
 
 

Author Profile
Beverly Chandler
Employee title
Managing Editor