If you could buy only one stock ETF, this would be it — and it doesn’t track the S&P 500

Amid the coronavirus-led shutdown, the internet has become an increasingly important part of people’s lives and the economy. As a result, it just makes sense that stock market investors want to invest in internet-related stocks…

If you could buy only one ETF on a market pullback, maybe it’s not the S&P 500 ETF SPY, -1.93%, even though it tracks the benchmark index S&P 500 SPX, -2.13%. The ETF to consider is First Trust Dow Jones Internet Index Fund FDN, -2.17%.

Let’s explore this issue with the help of a chart.


Please click here for an annotated chart of the Dow Jones Industrial Average ETF DIA, -2.17%, which tracks the Dow Jones Industrial Average DJIA, -2.31%, compared with three other ETFs.

Note the following:

• The chart compares the Dow Jones Industrial Average ETF with the S&P 500 ETF; the Nasdaq 100 ETF QQQ, -1.55%, which represents the Nasdaq 100 NDX, -1.78% ; and the internet ETF.

• The chart shows that when the stock market dropped, the internet ETF outperformed the Dow by about 16%.

• The chart shows that during the recent rally, the internet ETF has outperformed the Dow by about 27%.

• In the market rally, the Nasdaq 100 ETF has been the star performer. However, the internet ETF has outperformed the Nasdaq 100 ETF by about 5.5%.

• The chart shows that the internet ETF fell in the Arora buy zone during the market drop, giving investors an excellent opportunity. Those investors are now sitting on about a 32% profit.

• The reason that the internet ETF has outperformed is that its stock holdings include Amazon AMZN, +0.19%, Facebook FB, -2.66%, PayPal PYPL, +1.38% and Netflix NFLX, +1.18%.

How to buy

For those who are itching to buy, start…

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