Investing in Social Media

The first exchange-traded fund aiming to replicate the performance of social-media stocks is set to launch Tuesday, and it offers significant exposure to Chinese Internet firms.

Tracking 25 stocks—including some launched in this year's most closely watched initial public offerings, such as Linked-In Corp.—the Global X Social Media ETF is structured as a pretty simple way to make sure you're exposed to the full sector. ETFs are baskets of shares that trade like a single stock.

Investor interest in social-media stocks has surged this year, but the twin heavyweights of U.S. social media, Facebook Inc. and Twitter Inc., aren't publicly listed.

That helps explain why 37% of the fund's initial weighting will be in Chinese firms, such as Tencent Holdings Ltd. and Sina Corp., compared with 26% in U.S. stocks.

The U.S. group includes Google Inc. at 4.75%. That is the same weighting given to Pandora Media Inc. and to Groupon Inc. LinkedIn is at 3.5%. Three Japanese stocks get more than 19% collectively, while Russian, German, Indian, Taiwanese, Italian and U.K. social-media stocks are also represented.

The focus will almost certainly shift in favor of the U.S. as the fund adds new holdings.

It may take a while, though. There have been conflicting reports about when Facebook might plan an Initial Public Offering (IPO).

However, the surge of interest ahead of these Facebook and Twitter IPOs and in social-media companies generally has conjured memories of the Internet bubble of the late 1990s.

Note: This is for information only and is not intended as specific investment advice. Investing in social media can be considered a speculative investment.