First Trust DJ Internet Index Fund (FDN)

The First Trust DJ Internet Index Fund (FDN) is a passive exchange-traded fund that holds the largest, most liquid internet and technology companies, serving as a pure-play index for investors seeking concentrated exposure to the digital economy without the broader diversification of a total-market or technology-sector fund.

Ticker	FDN (NASDAQ)
Sponsor	First Trust Advisors
Underlying index	Dow Jones Internet Index
Number of holdings	~50–60 companies
Typical major sectors	Software, e-commerce, digital media, cloud computing
Weighting method	Market-cap weighted
Expense ratio	~0.30–0.35% (typical)
Fund style	Passive index tracking

What the Dow Jones Internet Index captures

The Dow Jones Internet Index was created to track companies whose revenues and earnings are primarily derived from internet-based or digital services — software as a service, e-commerce platforms, digital advertising, cloud infrastructure, online payment systems, streaming media, and social networks. Unlike the broader technology sector, which includes hardware manufacturers and semiconductor designers, the internet index focuses on the purely digital layer: companies that exist because the internet exists.

The index includes household names like Alphabet (which owns Google and YouTube), Amazon, Meta (Facebook), Netflix, and Nvidia alongside smaller but significant internet-dependent firms — payment processors, cloud vendors, digital-media platforms. The definition of “internet company” is broader than it sounds: Nvidia qualifies because so much of its revenue now flows from cloud computing and data-center infrastructure. The index is not a mere list but an evolved document reflecting how the internet economy has deepened and sprawled beyond the original portal-and-search template.

Why FDN concentrates rather than diversifies

FDN holds roughly 50 to 60 companies, making it far more concentrated than a broad-market index like the S&P 500 (500 holdings) or the entire market (3,500+). This concentration is deliberate. The index screens for companies whose primary business is internet-derived, not those with internet revenue as a sideline. The result is a portfolio heavily weighted toward the largest internet giants — the top 10 holdings typically account for 40% or more of the fund.

This concentration is both the fund’s appeal and its risk. For investors who believe the internet economy will drive returns and who want a pure exposure to that theme, FDN’s focused holding list is cleaner than buying a technology sector ETF that includes chip makers and defense contractors. For those seeking broad diversification, the concentration is a drawback — a downturn in a few mega-cap internet names can drag the entire fund sharply lower.

The long history of internet-sector performance

FDN launched in the early 2000s, long after the dot-com bubble and crash of the early 2000s. The fund benefited enormously from the decade-long outperformance of technology and internet stocks, particularly from 2010 onward, as venture-backed companies either went public or were acquired, and as digital advertising, cloud computing, and e-commerce became the dominant growth engines of the economy.

The relative performance has been uneven. From 2010 to 2020, FDN significantly outpaced the S&P 500 and broader market indexes. From 2021 to early 2022, the outperformance reversed as interest-rate increases pressured high-valuation growth stocks. In the subsequent recovery, internet stocks rebounded. The lesson is that FDN’s returns are tightly tied to the appetite for growth and technology stocks — a cyclical bet, not a stable source of returns.

Costs and liquidity

FDN’s expense ratio is competitive: most internet and technology sector ETFs charge 0.25–0.50%, and FDN is at the lower end. The fund is highly liquid; millions of shares trade daily on the NASDAQ, and the bid-ask spread is tight. An investor can buy or sell large positions without materially moving the price. For retail investors, FDN is easy to own and trade.

Who buys FDN and why

FDN suits:

Investors with conviction that internet and digital-economy companies will outperform the broader market over the holding period.
Those seeking internet exposure without stock-picking; the index approach removes the need to choose between Alphabet and Meta, Amazon and Shopify.
Tech-tilted portfolios that want a pure play on the digital economy separate from semiconductors, hardware, and other technology subsectors.
Traders and tactical allocators who use FDN to take express positions on growth-stock appetite, rotating into it during bull markets and out during risk-off periods.

FDN is less suitable for conservative investors, retirees, or those building core buy-and-hold portfolios; the fund’s concentration and growth bias create larger drawdowns in downturns than a broad-market fund would see.

Researching FDN and internet-stock performance

To understand FDN as an investment, start by examining the index’s current composition and the weighting of the top holdings; because it is market-cap weighted, the largest companies drive most of the return. Review FDN’s performance in different market cycles — particularly in 2022, when growth stocks fell sharply, and in 2024–2025, as the market cycle turned. Compare FDN’s returns to the Invesco QQQ (which tracks the tech-heavy Nasdaq 100), the Vanguard Mega Cap Growth ETF, and the S&P 500 to understand where internet stocks fit in your broader portfolio. Finally, keep an eye on the index methodology; as the internet economy evolves and cloud computing, artificial intelligence, and new digital services displace older models, the index methodology must adapt, and staying current on what “internet company” means will keep you grounded in what FDN actually owns.