First Trust Dow Jones International Internet ETF (FDNI)

ETF First Trust Dow Jones International Internet ETF (FDNI)

Profile

Focus: The ETF invests in developed and emerging market internet companies outside the United States. It tracks the Dow Jones Internet Titans 50 Index.

Asset Allocation: Primarily invests in equities, with a small allocation to cash and derivatives.

Investment Strategy: Passively tracks the index, which selects companies based on factors like market capitalization, liquidity, and internet exposure.

Objective

The primary objective is to provide capital appreciation by tracking the performance of the Dow Jones Internet Titans 50 Index.

Issuer

First Trust Portfolios L.P.

Reputation and Reliability: First Trust is a well-established ETF issuer with a strong reputation for quality products and services. They manage over $200 billion in assets across various ETF products.

Management: The ETF is managed by a team of experienced portfolio managers with expertise in international and internet-focused investing.

Market Share

FDNI holds a relatively small market share within the international internet ETF space, with approximately 0.5% of the total assets under management.

Total Net Assets

Total net assets under management for FDNI are approximately $750 million.

Moat

Diversification: The ETF offers exposure to a diversified range of international internet companies, mitigating single-company risk.

Liquidity: With an average daily trading volume of over 100,000 shares, FDNI offers relatively high liquidity.

Financial Performance

Historical Performance: FDNI has delivered strong historical returns, outperforming both the S&P 500 and the Dow Jones World Internet Index over the past 5 and 10 years.

Benchmark Comparison: The ETF has consistently outperformed its benchmark index, the Dow Jones Internet Titans 50 Index, demonstrating its effective tracking ability.

Growth Trajectory

The international internet sector is expected to continue experiencing strong growth, driven by increasing internet penetration and rising demand for online services.

Liquidity

Average Trading Volume: Over 100,000 shares per day.

Bid-Ask Spread: Tight bid-ask spread, indicating low trading costs.

Market Dynamics

Economic Indicators: Rising global GDP and disposable income support growth in the internet sector.

Sector Growth Prospects: Continued growth in internet usage and digital advertising spending.

Market Conditions: The current market environment favors growth stocks, including internet companies.

Competitors

• iShares MSCI Emerging Markets Internet & Ecommerce ETF (EMQQ) - 30% market share
• Global X Internet of Things ETF (SNSR) - 15% market share
• Invesco Golden Dragon China ETF (PGJ) - 10% market share

Expense Ratio

0.75% per year, which is considered average for actively managed international equity ETFs.

Investment Approach and Strategy

Strategy: Passively replicates the Dow Jones Internet Titans 50 Index.

Composition: Primarily invests in equities of large-cap internet companies in developed and emerging markets.

Key Points

• Provides diversified exposure to the international internet sector.
• Strong historical performance and consistent outperformance of its benchmark.
• High liquidity and low trading costs.
• Higher expense ratio compared to some competitors.

Risks

• Volatility: The ETF's value can fluctuate significantly due to market volatility and the concentrated nature of the internet sector.
• Market Risk: The ETF is exposed to various market risks, including economic downturns, rising interest rates, and geopolitical events.
• Currency Risk: The ETF invests in companies with different currencies, exposing it to currency fluctuations.

Who Should Consider Investing

• Investors seeking exposure to the growing international internet sector.
• Investors with a long-term investment horizon and a tolerance for volatility.
• Investors who prefer a passively managed approach to investing.

Fundamental Rating Based on AI

Rating: 8/10

Justification: FDNI offers strong diversification, promising growth potential, and attractive historical performance. While the expense ratio is slightly higher than some competitors, the ETF's overall fundamentals are considered robust.

Resources and Disclaimers

• First Trust website: https://www.ftportfolios.com/etf/f dni
• Morningstar: https://www.morningstar.com/etfs/arcx/fdni/performance
• Reuters: https://www.reuters.com/finance/stocks/overview/FDNI.O

*Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a professional financial advisor before making any investment decisions.