A tech ETF for earnings season

Here's a long-term, stable play in the technology sector.

By TheStreet Staff Apr 12, 2011 11:38AM

By Don Dion, TheStreet


Earnings season began with Alcoa's (AA) report after Monday's market close.


In the coming weeks, other companies will follow Alcoa's lead and share how they have fared over the past quarter. Performance numbers will interest investors wondering about the economic recovery. Equally important will be the companies' respective outlooks and guidance for the remainder of the year.


ETF investors will want to keep a close watch on the earnings calendar. As the season presses on, a number of major index components will step up to the plate.


For instance, when JPMorgan (JPM) and Bank of America (BAC) release their reports during the second half of the week, investors holding the SPDR KBW Bank ETF (KBE) will want to pay close attention. These two companies are in the top holdings of KBW, and on top of directing the fund's performances over the next week, they will likely provide clues as to how other major financial institutions fared during the opening months of 2011.

Google (GOOG) is another hotly anticipated household name that is on tap to report its quarterly earnings this week.


In addition to monitoring the performance of search, the Android OS and the company's other branches and divisions, investors will likely have a close eye on how founder Larry Page is adjusting to his new role as the company's CEO. In the short time since taking over the reins from Eric Schmidt, Page has already generated plenty of attention from the media. Most recently, he made headlines when he announced a dramatic shake-up to the company's management structure.


It will be interesting to see what else Page has in store.


The company's performance and outlook for the rest of the year will heavily influence the popular First Trust Dow Jones Internet Index Fund (FDN). Google accounts for close to 10% of the fund's total portfolio, making the search giant FDN's largest position.


Following Google, earnings numbers from other top index constituents such as eBay (EBAY) and Netflix (NFLX) will make FDN an exciting fund to watch in the near term. However, this fund boasts qualities that make it attractive as a long-term bet as well.


With ample exposure to companies such as Google, Amazon (AMZN) and eBay, FDN gives investors access to the growing popularity of e-commerce during the holiday season. Over the past few years, however, I have watched the fund grow and evolve to become a stable long-term way to target our growing reliance on technology.

Smartphones, tablet computers and laptops are becoming increasingly ingrained into our everyday lives, and FDN lets investors access the companies that make the gadgets.


As we head through this current earnings season, FDN is a fund I encourage investors to keep a close watch on. Beyond this exciting time for the U.S. markets, however, this is an ETF that bodes well as a long-term, stable way to access the growing popularity of the technology sector.


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