Up nearly 30% year-to-date, the First Trust Dow Jones Internet Index Fund (NYSEARCA: FDN), the largest Internet ETF trading in the U.S., could be primed for more near-term gains if historical trends repeat.
The FANG stocks – Facebook Inc. (NASDAQ: FB), Amazon.com Inc. (NASDAQ: AMZN), Netflix Inc. (NASDAQ: NFLX) and Google parent Alphabet Inc. (NASDAQ: GOOG) – have been important drivers of FDN’s bullish year-to-date showing. For investors, it is noteworthy that the fourth quarter is usually kind to technology and consumer discretionary names.
FDN “has been one of the best performing U.S. ETFs during the last three months of the year since it debuted in mid 2006. The $4.78 billion FDN, which is the largest internet ETF trading in the U.S., posts an average fourth quarter gain of 4.4% and a median increase of 4.8%, generating gains in the quarter 60% of the time on average,” according to Investopedia.
FDN’s primary rival is the PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI). PNQI tracks the largest and most liquid U.S.-listed companies engaged in internet-related businesses and employs a modified market cap-weighted indexing methodology based on the market cap ranking of the underling idnex securities.
“FDN tracks the Dow Jones Internet Composite Index and allocates over 30% of its combined weight to the FANG quartet. Nearly 70% of FDN’s holdings are classified as technology stocks, with 19.2% being classified as consumer discretionary names. Amazon and Netflix account for the bulk of the ETF’s consumer cyclical exposure,” reports Investopedia.