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.
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 1, placing it in top 6%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $6.88 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
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
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 37.60% 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 9.42% of total assets, followed by Amazon.com, Inc. (AMZN – Free Report) and Netflix, Inc. (NFLX – Free Report) .
The top 10 holdings account for about 61.88% of total assets under management.
Performance and Risk
So far this year, FDN return is roughly 31.56%, and is up about 31.56% in the last one year (as of 12/31/2024). During this past 52-week period, the fund has traded between $179.04 and $257.24.
The ETF has a beta of 1.12 and standard deviation of 29.99% 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 excellent 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.
Amplify Transformational Data Sharing ETF (BLOK – Free Report) tracks —————————————- and the ARK Next Generation Internet ETF (ARKW – Free Report) tracks N/A. Amplify Transformational Data Sharing ETF has $843.17 million in assets, ARK Next Generation Internet ETF has $1.80 billion. BLOK has an expense ratio of 0.76% 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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