In what has been a good year for the technology sector and the corresponding ETFs, Internet stocks and ETFs are contributing to some of that upside.
For example, the First Trust Dow Jones Internet Index Fund (NYSEArca: FDN) is higher by nearly 9% year-to-date.
With the holiday shopping season here, FDN could have some tailwinds as U.S. consumers increasingly turn to the convenience of online shopping over traditional brick and mortar retailers.
Online retail outlets or the e-commerce business seems to be flourishing. Amazon (NasdaqGS: AMZN) revealed strong quarterly growth in both earnings and revenues. Online bazaar eBay (NasdaqGS: EBAY) impressed investors after management raised guidance and reported revenue beats. Chinese e-commerce behemoth Alibaba Group Holding Ltd. (NYSE: BABA) showed second quarter earnings beat estimates with revenue above the consensus.
Observers have pointed to blow-out events like Amazon’s Prime Day sale on July 12 as large selling points to attract greater consumer interest, supporting the notion that consumers have shifted their spending habits. Wal-Mart has also noticed this ongoing shift and is acquiring e-commerce retailer Jet.com to bolster its online presence.
Amazon and eBay combine for nearly 14% of FDN’s lineup. The $3.59 billion ETF tracks the Dow Jones Internet Composite Index. FDN follows companies that generate most of its revenue from internet businesses and includes some market cap and liquidity requirements for inclusion.