Yahoo Finance Should You Invest in the First Trust Dow Jones Internet ETF (FDN)?
Looking for broad exposure to the Technology - Internet segment of the equity market? You should consider the First Trust Dow Jones Internet ETF (FDN), a passively managed exchange traded fund launched on 06/19/2006.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Internet is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $5.90 billion, making it one of the largest ETFs attempting to match the performance of the Technology - Internet segment of the equity market. FDN seeks to match the performance of the Dow Jones Internet Composite Index before fees and expenses.
The Dow Jones Internet Composite Index includes only companies whose primary focus is Internet-related.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.52%, making it on par with most peer products in the space.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 37% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Amazon.com, Inc. (AMZN) accounts for about 10.08% of total assets, followed by Meta Platforms Inc. (class A) (META) and Netflix, Inc. (NFLX).
The top 10 holdings account for about 53.69% of total assets under management.
Performance and Risk
The ETF has gained about 7.93% so far this year and is up roughly 26.47% in the last one year (as of 06/24/2024). In that past 52-week period, it has traded between $147.79 and $207.84.
The ETF has a beta of 1.10 and standard deviation of 29.97% for the trailing three-year period, making it a high risk choice in the space. With about 42 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Dow Jones Internet ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FDN is an outstanding option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Invesco NASDAQ Internet ETF (PNQI) tracks NASDAQ Internet Index and the ARK Next Generation Internet ETF (ARKW) tracks N/A. Invesco NASDAQ Internet ETF has $772.46 million in assets, ARK Next Generation Internet ETF has $1.45 billion. PNQI has an expense ratio of 0.60% and ARKW charges 0.87%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
First Trust Dow Jones Internet ETF (FDN): ETF Research Reports
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
ARK Next Generation Internet ETF (ARKW): ETF Research Reports
Invesco NASDAQ Internet ETF (PNQI): ETF Research Reports
Meta Platforms, Inc. (META) : Free Stock Analysis Report
