Wouldn’t Investors Welcome A Smartphone ETF With Stakes In Companies That Produce The iPhone And The Blackberry?

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April 14, 2010 9:10pm NYSE:MTK NYSE:XLK

“Earlier this week, Nasdaq announced a new index for companies engaged in the manufacturing or development of smartphone products. The benchmark, known as the NASDAQ OMX CEA


 Smartphone Index (QFON), also includes companies involved in the distribution of handsets, hardware, software, and mobile networks associated with the development, sale, and usage of smartphones. The Nasdaq classifies a smartphone as a wireless, mobile communication device offering advanced capabilities and functionalities, including web access, through the use of an identifiable operating system,” Eric Dutram Reports From ETF Database.

Dutram goes on to say, “The index debuted at a price of $250 and has managed to stay above that mark in the first few days of trading. It includes 84 companies and has weightings in firms such as Motorola (NYSE: MOT), Apple Inc (NASDAQ: AAPL), Palm (NASDAQ: PALM), Google (NASDAQ: GOOG), and Samsung, among many others. The individual companies will also have to meet a few rules in order to be included in the index. These including trading on an index eligible exchange as well as having a minimum float-adjusted worldwide market capitalization of $250 million, and a minimum three-month average daily dollar trading volume of $1 million. It will have a breakdown that is heavily skewed towards handsets and software/hardware companies which will each make up 45% of the index; service providers make up the remaining 10%.”

”This index brings sharper focus to an industry that is transforming the world’s ability to communicate, work, and interact with each other,” said NASDAQ OMX Executive Vice President John Jacobs. “Investors, thanks to this index, can now easily track companies that are working diligently to combine the benefits of the phone and computer in a single device.”

“A smartphone-focused ETF was recently included in a ETFdb.com list of ETF ideas that don’t yet exist but could be successful if introduced to U.S. investors (see other ETFs That Don’t Exist But Should). Obviously one of the first steps towards the launch of a new ETF is the identification (or development) of an index. A number of ETF issuers are no doubt taking note of this new index, and it wouldn’t be surprising to see an ETF linked to the benchmark hit the market at some point in the future. Smartphones are growing increasingly important to many technology companies’ bottom lines and the case can certainly be made for an ETF tracking this industry, especially now that there is an index which adequately tracks the dynamic smartphone market,” Dutram Reports.

The ETF Professor From Benzinga seems to differ on the idea and says, “Well, the Professor is here to tell you that a smartphone ETF isn’t necessary because it can be argued that one already exists. The SPDR Morgan Stanley Technology ETF (NYSE: MTK) has been mentioned by the Professor as a hidden gem in the world of tech ETFs and is itself a smartphone ETF. A new smartphone ETF would logically hold Apple (Nasdaq: AAPL), Google (NYSE: GOOG), Research In Motion (NYSE: RIMM) and Palm (NYSE: PALM). MTK holds all of those names already except for Palm and not having Palm is just fine because there is nothing to save this stock beyond a takeover.”

Here are some details we put together on the NASDAQ OMX CEA Smartphone Index (QFON) below:

The NASDAQ OMX CEA Smartphone Index is designed to track the performance of companies engaged in the Smartphone segment of the telecom and technology sectors.  The Index includes companies primarily involved in the building, design, and distribution of handsets, hardware, software, and mobile networks associated with the development, sale, and usage of Smartphone’s. A Smartphone is classified as a wireless, mobile communication device offering advanced capabilities and functionalities, including web access, through the use of an identifiable operating system.

Index Holdings as of 4/14/10

Company Name Security Symbol
Samsung Electronics Co 005930
KT Corp 030200
LG Electronics Inc 066570
China Unicom 00762
ZTE Corp H 00763
China Mobile (Hong Kong) 00941
Byd Co H 01211
Foxconn International Holdings 02038
Inventec Corp 2356
HTC Corporation 2498
Wistron Corp 3231
Ningbo Bird Co A 600130
Toshiba Corp 65020
Elpida Memory 6665
NEC Corp 67010
Sharp Corp 67530
Sony Corp 67580
Kyocera Corp 69710
Compal Communications Inc 8078
KDDI Corp 94330
NTT DoCoMo Inc 94370
Softbank Corp 99840
Agilent Technologies Inc (A)
Apple Inc. (AAPL)
Analog Devices Inc (ADI)
Altera Corp (ALTR)
Alcatel-Lucent SA ADR (ALU)
American Tower Corp A (AMT)
Arm Holdings ADR (ARMH)
Atmel Corp (ATML)
AVAGO TECHNOLOGIES (AVGO)
Benchmark Electronics Inc (BHE)
Broadcom Corp A (BRCM)
Crown Castle Intl Corp (CCI)
CIENA Corp (CIEN)
Celestica Inc (CLS)
Cisco Systems Inc (CSCO)
CTS Corp (CTS)
Commscope Inc (CTV)
Amdocs Ltd (DOX)
Deutsche Telekom (DTE)
Ericsson, L.M. Telefonaktie B (ERIC B)
Flextronics Intl Ltd (FLEX)
France Telecom SA (FTE)
Google Inc (GOOG)
Gemalto NV (GTO)
Infineon Technologies AG IFX)
Intel Corp (INTC)
Jabil Circuit Inc (JBL)
LSI Corporation (LSI)
Mobile Telesystems SP ADR (MBT)
Motorola Inc (MOT)
Marvell Technology Group Ltd (Bermuda) (MRVL)
Micron Technology Inc (MU)
MAXIM INTEGRATED (MXIM)
Nokia OYJ ADR (NOK)
National Semiconductor (NSM)
Nvidia Corp (NVDA)
On Semiconductor Corp (ONNN)
OmniVision Technologies Inc (OVTI)
Palm Inc (PALM)
QUALCOMM Inc (QCOM)
RF Micro Devices Inc (RFMD)
Research In Motion Limited (RIMM)
Sprint Nextel Corp (S)
Sanmina-SCI Corp (SANM)
SBA Communications Corp (SBAC)
STMicroelectronics NV [FR Cross-List] (STM)
Skyworks Solutions Inc (SWKS)
Sybase Inc (SY)
Synaptics Inc (SYNA)
AT&T Inc (T)
Telefonica SA (TEF)
Tekelec Inc (TKLC)
Tellabs Inc (TLAB)
Telecom Italia SpA (TIT)
Triquint Semiconductor (TQNT)
TeleCommunication Systems Inc (TSYS)
Texas Instruments Inc (TXN)
Vivendi SA (VIV)
Vodafone Group (VOD)
Vishay Intertechnology Inc (VSH)
Verizon Communications Inc (VZ)
Xilinx Inc (XLNX)
Chart for NASDAQ OMX CEA Smartphone (^QFON)

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