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) 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 DetailsThe 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.CostsCost 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 HoldingsEven 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) accounts for about 9.42% of total assets, followed by Amazon.com, Inc. (AMZN) and Netflix, Inc. (NFLX).The top 10 holdings account for about 61.88% of total assets under management.Performance and RiskSo 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.AlternativesFirst 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) tracks ---------------------------------------- and the ARK Next Generation Internet ETF (ARKW) 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 LineTo 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.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First Trust Dow Jones Internet ETF (FDN): ETF Research Reports Amazon.com, Inc. (AMZN): Free Stock Analysis Report Netflix, Inc. (NFLX): Free Stock Analysis Report ARK Next Generation Internet ETF (ARKW): ETF Research Reports Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports Meta Platforms, Inc. (META): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks