The technology focus for this ETF drove it to substantial outperformance over most trailing periods. The emphasis on technology has been absolutely exceptional for returns over the last year. Investors have become increasingly enamored with the technology sector. This emphasis is driving up PE ratios for technology companies. Investors will be thrilled by the massive capital gains.
The First Trust Dow Jones Internet Index Fund (FDN) has destroyed other technology funds for over a decade. FDN, while not being pure technology, has kept up with other technology ETFs and returned over 30% this last year. The top holdings of Amazon and Facebook have helped FDN outperform other technology ETFs. The ETF is materially too expensive today. Investors should wait for a material decline in PE ratios.
Source: Seeking Alpha
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