Looking for broad exposure to the Technology - Internet segment of the equity market? You should consider the First Trust Dow Jones Internet ETF (
FDN Quick Quote FDN - Free Report) , a passively managed exchange traded fund launched on 06/19/2006.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many 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 7, placing it in top 44%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $4.57 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.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 45.50% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Amazon.com, Inc. (
AMZN Quick Quote AMZN - Free Report) accounts for about 9.78% of total assets, followed by Meta Platforms Inc. (class A) and Alphabet Inc. (class A) ( GOOGL Quick Quote GOOGL - Free Report) .
The top 10 holdings account for about 49.55% of total assets under management.
Performance and Risk
The ETF has lost about -36.31% and is down about -31.34% so far this year and in the past one year (as of 05/16/2022), respectively. FDN has traded between $135.88 and $252.25 during this last 52-week period.
The ETF has a beta of 1.13 and standard deviation of 29.80% for the trailing three-year period, making it a high risk choice in the space. With about 43 holdings, it has more concentrated exposure than peers.
First Trust Dow Jones Internet ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FDN is a good option for those seeking exposure to the Technology ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Amplify Transformational Data Sharing ETF (
BLOK Quick Quote BLOK - Free Report) tracks ---------------------------------------- and the ARK Next Generation Internet ETF ( ARKW Quick Quote ARKW - Free Report) tracks N/A. Amplify Transformational Data Sharing ETF has $651.38 million in assets, ARK Next Generation Internet ETF has $1.53 billion. BLOK has an expense ratio of 0.71% and ARKW charges 0.83%. Bottom Line
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Zacks ETF Center.