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Should You Invest in the First Trust Dow Jones Internet ETF (FDN)?
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If you're interested in broad exposure to the Technology - Internet segment of the equity market, look no further than the First Trust Dow Jones Internet ETF (FDN - Free Report) , a passively managed exchange traded fund launched on 06/19/2006.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Internet is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 38%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $4 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
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 47.70% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Amazon.com, Inc. (AMZN - Free Report) accounts for about 10% of total assets, followed by Meta Platforms Inc. (class A) (META - Free Report) and Alphabet Inc. (class A) (GOOGL - Free Report) .
The top 10 holdings account for about 49.49% of total assets under management.
Performance and Risk
The ETF has lost about -43.73% so far this year and is down about -48.44% in the last one year (as of 11/21/2022). In that past 52-week period, it has traded between $116.11 and $237.78.
The ETF has a beta of 1.09 and standard deviation of 33.92% 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 2 (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 $450.33 million in assets, ARK Next Generation Internet ETF has $1.13 billion. PNQI has an expense ratio of 0.60% and ARKW charges 0.83%.
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)?
If you're interested in broad exposure to the Technology - Internet segment of the equity market, look no further than the First Trust Dow Jones Internet ETF (FDN - Free Report) , a passively managed exchange traded fund launched on 06/19/2006.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Internet is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 38%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $4 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
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 47.70% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Amazon.com, Inc. (AMZN - Free Report) accounts for about 10% of total assets, followed by Meta Platforms Inc. (class A) (META - Free Report) and Alphabet Inc. (class A) (GOOGL - Free Report) .
The top 10 holdings account for about 49.49% of total assets under management.
Performance and Risk
The ETF has lost about -43.73% so far this year and is down about -48.44% in the last one year (as of 11/21/2022). In that past 52-week period, it has traded between $116.11 and $237.78.
The ETF has a beta of 1.09 and standard deviation of 33.92% 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 2 (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 $450.33 million in assets, ARK Next Generation Internet ETF has $1.13 billion. PNQI has an expense ratio of 0.60% and ARKW charges 0.83%.
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.