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Should You Invest in the First Trust Dow Jones Internet ETF (FDN)? – September 20, 2022

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First Trust Dow Jones Internet ETF (NDF Free Report) launched on 06/19/2006, is a passively managed exchange-traded fund designed to offer broad exposure to the technology-internet sector of the stock market.

Passive ETFs are an increasingly popular choice among individual and institutional investors, and offer low costs, transparency, flexibility, and tax efficiency; They are also excellent vehicles for long-term investors.

Investor-friendly sector ETFs offer many options for acquiring low risk and diversified exposure to a wide range of companies in specific sectors. Technology – Internet is one of 16 broad Zacks sectors within the Zacks Industry Ranking. It currently ranks 10th, putting it in the bottom 38%.

Index details

The fund is sponsored by First Trust Advisors. It has amassed over $4.06 billion in assets, making it one of the largest ETFs trying to match the performance of the tech-internet sector in the stock 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 the Internet.

costs

Expense ratios are an important factor in the return of ETFs, and in the long run, cheaper funds can significantly outperform their more expensive counterparts, while other things remain the same.

The annual operating expense of the ETF is 0.51%, which puts it on par with most similar products in the field.

Sector exposure and collectibles

While ETFs offer diversified exposure, reducing the risk of individual stocks, taking a deep look at the fund’s holdings is valuable exercise. Most ETFs are very transparent products that disclose their holdings on a daily basis.

This fund has the largest allocation in the IT sector – about 50.80% of the portfolio. Discretionary communications and consumers of the first three positions.

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Looking at individual holdings, Amazon.com, Inc. (AMZN free report) accounting for about 9.04% of total assets, followed by Meta Platforms Inc. (Class A) (dead free report) and Alphabet Inc. (Class A) (The Google free report).

The top 10 holdings account for about 48.63% of the total assets under management.

performance and risk

The ETF has lost about -39.85% so far this year and is down about -44.80% in the last year (as of 09/20/2022). In the past 52 weeks, it has traded between $122.23 and $250.48.

The ETF has a beta version of 1.13 and a standard deviation of 32.54% for the subsequent three-year period, making it a high-risk option in the industry. With around 43 holdings, exposure to it is more focused than its peers.

alternatives

The First Trust Dow Jones Internet ETF holds a Zacks ETF rating of 3 (Hold), which is based on the expected return of the asset class, expense ratio, and momentum, among other factors. Thus, FDN is a reasonable option for those seeking exposure to the technology-specific ETFs area of ​​the market. Investors may also want to consider some of the other ETF options in the space.

ETF amplification to share transformative data (Bloc Free report) Tracks ———————————————— and the next generation internet of the ARK ETF (ARKW Free Report) Tracks N/A. Amplify Transformational Data Sharing ETF has $529.73 million in assets, ARK Next Generation Internet ETF has $1.38 billion. The BLOK fee is 0.71% and the ARKW fee is 0.83%.

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To learn more about this product and other ETFs, find products that match your investment goals and read articles on the latest developments in the world of ETF investing, please visit the Zacks ETF Center.

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