A Hidden Internet Gem
Published on Wednesday, 13 June 2012 22:53 Written by Todd Shriber
Most investors can rattle of the names of several triple-digit stocks in a heartbeat if for no other reason than that some of these stocks belong to some of the most familiar names in American business. Amazon (NASDAQ: AMZN), Priceline (NASDAQ: PCLN) and Google (NASDAQ: GOOG) have in their own ways, changed the way people use the Internet and each provide products and services used by millions of people everyday.
From an investors’ perspective, these stocks are alluring not only because of their lofty price tags, but because of the big moves they’re often home to. The aforementioned trio are the epitome of high-beta, high-growth, momentum stocks. And by virtue of their stellar growth records, they now have share prices that aren’t attainable for many investors.
The options market isn’t much of a better choice because stocks such as Amazon, Google and Priceline often have elevated premiums that are also punitive to cost-conscious investors. What that means is using ETFs to gain access to these type of names is often a wise idea, but one of the best ETFs with which to accomplish that objective is also quite anonymous.
That fund is the PowerShares NASDAQ Internet (NASDAQ: PNQI). Home to almost 70 stocks, PNQI just celebrated its fourth birthday, but the fund has just $49 million in assets under management. That’s a surprisingly low number given the sexy stocks that call this ETF home and it’s a number that indicates investors are missing out on this fund.
PNQI currently trades at $37.15 meaning that for barely more than $37 a share, investors can gain exposure to Amazon, Priceline and Google. And it’s not piddly exposure, either. Those stocks represent three of PNQI’s top four holdings and they combine for almost 27% of the ETF’s weight. Throw in Baidu (NASDAQ: BIDU), the Google of China and another high-flying triple-digit stocks, and that quarter accounts for about 35% of PNQI’s weight.
Said differently, unheralded PNQI helps investors get exposure to four well-known triple-digit momentum stocks for just a little more than $37. It would cost over $1,000 to get one share of each of those stocks.
Year-to-date, PNQI is up 7.6%. Since inception, the fund has returned more than 51%.
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