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Facebook and the Social Media ETF

tlydon@globaltrend.com (Tom Lydon)

Social media is a growing business, and investors are already positioning for the Facebook IPO. Still, for those who would rather sample the overall industry, there are social media-related exchange traded funds available.

IPO buyers face the risk of a huge price drop as existing shareholders sell their stake after the initial lockup periods, according to FAF Research on Seeking Alpha. However, ETF investors may mitigate this risk through ETFs that hold a basket of social-media related companies.

For instance, the Global X Social Media Index ETF (NYSEArca: SOCL) . SOCL tries to reflect the performance of companies engaged in the social media industry, including those that provide social networking, file sharing and other web-based media applications.

The ETF holds social media-related firms like LinkedIn (NYSE: LNKD - News), Pandora (NYSE: P), Groupon (NasdaqGS: GRPN - News), Google (NasdaqGS: GOOG - News) and Zynga (NasdaqGS: ZNGA - News). The fund will likely also include Facebook and Twitter if they ever decide to go public.

UBS E-TRACS Next Generation Internet ETN (NYSEArca: EIPO) is an exchange traded note that reflects the performance of Internet companies that have been publicly traded for less than three years, such as those found in SOCL, among others.

UBS E-TRACS Monthly 2x Next Generation Internet ETN (NYSEArca: EIPL) . The ETN follows the same Index as EIPO but offers 2 times the long leverage.

It should be noted that ETNs are unsecured debt obligations that are subject to the credit worthiness of the issuing bank. ETN investors may lose their principal in the unlikely event that the bank goes under.

First Trust Dow Jones Internet Index (NYSEArca: FDN) tries to reflect the performance of the Dow Jones Internet Composite Index, which covers Internet-related companies that have been trading for a minimum of three months.

Global X Social Media Index ETF

For more information on the tech sector, visit our technology category.

Max Chen contributed to this article.