Last year Internet stocks and exchange traded funds managed to post gains despite the Facebook (NasdaqGS: FB) IPO flop early on. The S&P 1500 Internet Retail sub-industry gained 43.5% while the Internet Software and Services sub-industry gained 22.2%.

“The story for the internet industry has certainly not been much different, though as of late it has comparatively fared better than most of its technology sector counterpart industries. Furthermore, the industry has come a long way from the dark days of the dotcom burst which shook its very foundations,” according to Zacks Equity Research.

The First Trust Dow Jones Internet Index Fund (NYSEArca: FDN) gained  17.9% in 2012 while the PowerShares NASDAQ Internet Portfolio (NasdaqGM: PNQI) gave back 20.1%. Both ETFs outperformed the S&P 500, however, they underperformed the associated benchmarks, reports S&P Capital in a recent note. [Facebook to Join Nasdaq-100, Tech Indices]

The ratings company weights both of the ETF “Underweight” and does not have a “Strong Buy” or “Buy” opinion for any of the single stocks with the top holdings of FDN. A closer look at both ETFs presents valuable advantages for investors who seek exposure to certain stocks, while gaining portfolio diversification.

The recent all-time high that Amazon (NasdaqGS: AMZN) stock set earlier this week has helped bolster any ETFs that allocate to the online retailer. The upward momentum appears to have staying power and the company stock gained 19.3%. [ETF Chart of the Day: Home Construction]

FDN does trade for about $40, and while the price tag should not be the deciding factor, the high quality stocks in the top holdings could be convincing. Decent weightings to Amazon, Google (NasdaqGS: GOOG) and Priceline (NasdaqGS: PCLN) make the ETF well worth another look, as these companies compose about 20% of FDN’s weight.

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