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The Social Media Index: Today’s Market Sentiment Indicator

editor@etftrends.com (ETF Trends)

Social media has become an ingrained facet of everyday life, reflecting people’s various opinions on the spot. As a way to harness the freely available information, a new exchange traded fund strategy hones in on online investment discussions and identifies trending stocks.

On the upcoming webcast this Tuesday, The Social Media Index: Today’s Market Sentiment Indicator , Jamie Wise, CEO and Founder of Buzz Indexes, and Jeremy Held, Director of Research & Investment Strategy at ALPS Portfolio Solutions, will discuss a social media insights strategy and how advisors can benefit from crowd sourcing social media users.

Specifically, the recently launched Sprott BUZZ Social Media Insights ETF (BUZ) , which tries to reflect the performance of the BUZZ Social Media Insights Index, identifies U.S. stocks that rank highest in terms of positive insight. These positive factors may include bullish investor perception, brand value perceptions and breadth of discussion from mentions on social media and other online media.

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The social media ETF would try to identify social momentum or prevailing trends of the masses as an indicator for future price momentum.

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The underlying index would focus on the most talked about stocks, understand the level of conversation, pick the 100 most mentioned stocks, rank the picks using a proprietary scoring model and end up with 25 stocks that exhibit the most positive insight scores on a monthly basis. Components are weighted by the so-called insight score and no security makes up more than 15% of the portfolio.

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Among the fund’s current top picks, Alphabet (GOOGL) makes up 13.0% of BUZ’s underlying portfolio, followed by Apple (AAPL) 8.8%, Walt Disney (DIS) 7.3%, Valeant Pharmaceuticals (VRX) 5.5% and Tesla Motors (TSLA) 5.0%.

For more information on smart-beta strategies, visit our smart-beta category .

Financial advisors who are interested in learning more about the social media strategy can register for the Tuesday, May 24 webcast here .