3 Tech ETFs Crushed As Washington Crisis Drags On

Markets were rocked in Tuesday trading as worries continued to pile up over the Washington D.C.-standoff. Republicans and democrats still appear to be far apart on most issues, and there is little hope for either side compromising at this time.

Comments from President Obama didn’t help matters either, as the sell-off actually intensified during his talk with the press about the situation. Thanks to this, markets finished down about 1.1% for the Dow, and 1.2% for the S&P 500, while the tech-heavy Nasdaq tumbled by 2% on the day.

This stark underperformance in the Nasdaq was the real story of the session, as it suggested that technology names led the way on the downside. This was definitely the case too, as a number of hot, high beta technology names like Facebook (FB) and Yelp (YELP) plunged by more than 6.6% on the day.

This was far in excess of other technology names—like Cisco or Apple for example—suggested that the bulk of the pressure was concentrated in the higher volatility corners of the technology world. It also could mean that traders are starting to pull money out of these high flyers, as concerns continue to build over a positive resolution to the current government crisis.

Should the trend continue, higher beta—and up until now strong performing—names in the technology world could clearly be victims of the D.C.-dysfunction. This means that sector ETFs tracking these high beta corners of the market are likely avoids in the short term, but also due for a sharp move higher if Washington gets its act together.

So, it might be a good idea to pay close attention to the trends in the following funds in the days ahead, as either way they could see some big moves, depending on if the crisis deepens, or if a solution is somehow found in short order:

First Trust Dow Jones Internet Index Fund (FDN) - down 3.5%

This internet-focused ETF tumbled in Tuesday trading as its portfolio of high beta names struggled. The fund focuses on companies that derive at least half of their revenues from the internet, holding 41 stocks in its basket.

Top holdings include names like Google, Amazon, and Facebook, all of which account for less than 10% of assets. Since the fund focuses a bit less on ‘new tech’ names and has significant holdings in more established names, it wasn’t as hurt in Tuesday’s session.

Still, the ETF does offer a significant component to the new tech world, including FB, Netflix, and LinkedIn all in its top ten holdings. Thanks to this, FDN lost more than broad tech funds like XLK (down 1.6% on the day), but less than some of the more new tech-focused firms out there.

PowerShares NASDAQ Internet Portfolio (PNQI) - down 4.1%

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For another play on the internet market, investors have PowerShares’ PNQI. This ETF tracks the NASDAQ Internet Index, holding about 80 names in its basket, and charging investors 60 basis points for the exposure.

The fund has been a solid performer as of late, and it has significant holdings in many of the new age tech companies, including top ten allocations to FB, PCLN, YNDX, NFLX, and TRIP. The fund does still have allocations to the old guard though, as Amazon, eBay, and Google are all in the top five for holdings, accounting for more than 7.2% of assets each.

Many of the so-called web 2.0 companies led on the way up, leading to huge gains for PNQI. However, these big winners have obviously fallen on hard times in the debt debate, pushing this fund down almost 2.5 times as much as the broad tech index for Tuesday’s session.

Global X Social Media Index ETF (SOCLOriginal post