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Should You Invest in the First Trust Dow Jones Internet ETF (FDN)?
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Designed to provide broad exposure to the Technology - Internet segment of the equity market, the First Trust Dow Jones Internet ETF (FDN - Free Report) is a passively managed exchange traded fund launched on 06/19/2006.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways 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 8, placing it in top 50%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $5.72 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.51%, making it on par with most peer products in the space.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 39.10% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Meta Platforms Inc. (class A) (META - Free Report) accounts for about 10.44% of total assets, followed by Amazon.com, Inc. (AMZN - Free Report) and Netflix, Inc. (NFLX - Free Report) .
The top 10 holdings account for about 59.30% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Dow Jones Internet ETF has gained about 8.53% so far, and is up roughly 24.87% over the last 12 months (as of 08/27/2024). FDN has traded between $147.79 and $210.29 in this past 52-week period.
The ETF has a beta of 1.12 and standard deviation of 30.26% 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 - Free Report) tracks NASDAQ Internet Index and the ARK Next Generation Internet ETF (ARKW - Free Report) tracks N/A. Invesco NASDAQ Internet ETF has $773.29 million in assets, ARK Next Generation Internet ETF has $1.40 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.
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Should You Invest in the First Trust Dow Jones Internet ETF (FDN)?
Designed to provide broad exposure to the Technology - Internet segment of the equity market, the First Trust Dow Jones Internet ETF (FDN - Free Report) is a passively managed exchange traded fund launched on 06/19/2006.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways 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 8, placing it in top 50%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $5.72 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.51%, making it on par with most peer products in the space.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 39.10% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Meta Platforms Inc. (class A) (META - Free Report) accounts for about 10.44% of total assets, followed by Amazon.com, Inc. (AMZN - Free Report) and Netflix, Inc. (NFLX - Free Report) .
The top 10 holdings account for about 59.30% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Dow Jones Internet ETF has gained about 8.53% so far, and is up roughly 24.87% over the last 12 months (as of 08/27/2024). FDN has traded between $147.79 and $210.29 in this past 52-week period.
The ETF has a beta of 1.12 and standard deviation of 30.26% 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 - Free Report) tracks NASDAQ Internet Index and the ARK Next Generation Internet ETF (ARKW - Free Report) tracks N/A. Invesco NASDAQ Internet ETF has $773.29 million in assets, ARK Next Generation Internet ETF has $1.40 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.