Social Media ETF: Is this a tipping point

In a Nov 15 story from CNN: the prospects for social media ETF “SOCL” were pretty much slammed.

“NEW YORK (CNNMoney) — A social media exchange-traded fund has made its debut, but experts say to hold off before you “like” and “+1″ it to share it with all of your friends.

While the Global X Social Media ETF (SOCL), which began trading Tuesday at $14.98 per share, includes buzzworthy initial public offerings Groupon (GRPN), LinkedIn (LNKD), and Pandora (P), it lacks the world’s two rock star social media platforms since they have yet to go public: Facebook and Twitter.

“ETF and mutual fund providers have a habit of launching funds that they think will collect money from investors, but not necessarily make money for investors,” said Rick Ferri, founder of Portfolio Solutions and author of The ETF Book. “And I think this might be one of those ETFs.”

That’s why Ferri and other experts are dismissing the investment value of the ETF, calling it “premature” and a “gimmick” that’s capitalizing on the popularity of social media companies even though their record of generating profits is erratic.

“I don’t think the firms in this ETF are great proxies for the potential performance of Facebook and Twitter, and I think investors will be disappointed,” said Christian Magoon, CEO of Magoon Capital and an ETF industry consultant…”

Fast-forward a few months, and the above observations are [arguably] still accurate, if only judging by today’s chart:

But that’s not the point of this particular post, particularly when considering this ETF is still in its infancy, and regardless of whether this publication agrees or disagrees with above-noted observations.

The more poignant point is the inroads that social media applications are making within the financial services ecosystem. We’ve commented on this topic in the past (and will continue to!)…but we wanted to share a nice video clip that we just tripped over, courtesy of InvestmentNews’ coverage of a recent TD Ameritrade Conference.

This is Not to promote TD (unless they want to sign up as an advertiser on this site), but the video clip is worth watching if you’re an RIA, a consultant, or even if you’re a broker dealer. More…

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