Facebook Joins Nasdaq Q-50 Index


Facebook will officially become one of the 50 securities included in the Nasdaq Q-50 Index on Sept. 24, as the Nasdaq index welcomes the social media company, which has had a rough ride since its initial public offering on Nasdaq in the spring.

Many had hoped that after the Nasdaq OMX Group changed its “seasoning rules” in April for three of its most popular indexes—including the Nasdaq 100 Index—Facebook would be entering Nasdaq’s flagship index by September.

The addition would have propelled Facebook into a roster of ETFs, including the $34 billion PowerShares QQQ Trust (QQQ), which would have to own Facebook to continue replicating their benchmarks.

But instead, after bleeding more than half of its value in its first four months as a public company, Facebook is being added to the Nasdaq Q-50 Index—the feeder index for the Nasdaq 100, according to a press release from Nasdaq.

The benchmark, which is designed to track the performance of the 50 stocks that would be next in line for inclusion in the Nasdaq 100 Index, appears to have no ETFs attached to it.

Still, that’s not to say Facebook is not coming to a portfolio near you this fall. The social networking company, which had a market value of $47 billion as of Sept. 14, could also be slated to join the Dow Jones Internet Composite Index by Friday.

The Dow Jones index underlies the $480 million First Trust Internet Fund (FDN), and is scheduled to rebalance on Sept. 21, according to its methodology published on the S'P Dow Jones Indices website. Facebook seems to meet the criteria for inclusion, but the company declined to comment on individual stock additions or deletions.

For now, investors looking for exposure to the social media giant will have to continue to turn to funds such as the $15 million Global X Social Media ETF (SOCL), which has trimmed its exposure to Facebook now pegged at 5.2 percent, but still holds the company among its top holdings. A pair of UBS ETNs also own Facebook.

Facebook In Smaller Doses Elsewhere

Other ETFs that already serve up small allocations to Facebook include a pair of iShares ETFs that track Russell indexes, as well as one Vanguard fund tracking an MSCI index.

The $2.6 billion Vanguard Information Technology Index Fund (VGT) tracks the MSCI US Investable Market Index (IMI)/ Information Technology 25/50, an index made up of stocks of all market capitalizations within the U.S. information technology sector. The index rebalances quarterly at the end of February, May, August and November and it already added Facebook to its lineup.

VGT, which is up more than 22 percent year-to-date, has Facebook representing 0.31 percent of the portfolio.

Meanwhile, the Russell 1000 Index, which is a U.S. large-cap equities index representing about 92 percent of total market, as well as one of its sub-indexes—the Russell 100 Growth Index—added Facebook to their roster of holdings earlier this summer during their annual rebalancing in June.

The inclusion of Facebook into the Russell 1000 mix helped make technology the largest sector allocation in the index at 17.1 percent, pushing financials to second place, the company said at the time of the reconstitution.

The pair of Russell indexes benchmarks two iShares ETFs:the $7 billion iShares Russell 1000 Index Fund (IWB) and the $16.9 billion iShares Russell 100 Growth Index Fund (IWF).  Facebook is now part of both funds, representing 0.06 percent and 0.12 percent of each portfolio, respectively, as of Sept. 14.

Other Companies Joining the Nasdaq Q-50

Aside from Facebook, other names being added to the Nasdaq Q-50 on Sept. 24 include Groupon, Concur Technologies, Mellanox Technologies, NXP Semiconductors, ONYX Pharmaceuticals, Royal Gold, tw telecom and Western Digital Corp.

Nasdaq noted that Facebook can also be found in the Nasdaq Composite Index, which underlies the Fidelity Nasdaq Composite Index Tracking ETF (ONEQ), as well as in the Nasdaq Computer Index, the Nasdaq Global Select Market Composite and the Nasdaq Global Select Computer Index.


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