FDN includes large allocations to many of these big Internet names. Among its top holdings, AMZN is 10.6% of FDN’s portfolio, FB is 10.1%, PCLN is 6.0%, GOOGL is 5.9%, GOOG is 5.7% and NFLX is 5.0%.
“This ETF brings together all such firms into a single fund,” according to Bob Goldsborough, manager research analyst at Morningstar. “One thing that these firms all have in common is that competition is very intense. However, the return drivers for Internet companies can vary. The success of some firms here is driven by advertising growth, while others will succeed through increased user adoption or margin improvement. Broadly, though, most of these firms are benefiting from increased online ad spending, increased time spent online, and aggregation of consumer data.”
FDN is missing some prominent tech names due to its targeted strategy. For instance, big names like Apple (NasdaqGS: AAPL) and Microsoft (NasdaqGS: MSFT), which do not have a big Internet revenue stream, are not included in the ETF’s portfolio.
First Trust Dow Jones Internet Index Fund
For more information on the tech sector, visit our technology category.
Max Chen contributed to this article.