PNQI Invesco NASDAQ Internet ETF Trust

The tech-laden Nasdaq Composite Index – the best performing market index of the year – dropped 1.2% to start the week, marking the biggest daily drop since early February. Moreover the index dropped below its 50-day moving average for the first time this month on concerns about escalating crisis in Ukraine. Around 80% of the stocks listed in the Nasdaq traded in the red to open up the week.
 
Though the ongoing Ukraine crisis had certainly let it down, some of the well-known technology stocks in the index plunged on news of a potential deal between Apple and Comcast (read: 3 ETFs to Play on Ukraine Turmoil).
 
Tech Stocks Tumble
 
The biggest loser among tech stocks was video streaming company Netflix (NFLX). The video streaming company fell on news that Comcast Corporation (CMCSA) – the largest U.S. cable provider – is expected to tie up with Apple Inc. (AAPL) for a new streaming-TV service that would use an Apple set-top box.
 
The news came as a surprise for Netflix investors, given the fact that Comcast has recently signed a deal with the former for providing high quality streaming experiences for an unreported annual fee.
 
Until now, Apple has mainly restricted itself to selling and renting digital copies of movies. Apple’s entry into the streaming space, already dominated by players like Netflix and Amazon (AMZN), is expected to increase competition and be a natural threat to Netflix’s business.
 
Not surprisingly, Netflix plunged around 7% in the session. Moreover, other tech darlings including Google (GOOG), Amazon and Faceboook (FB) also posted declines of around 2.1%, 2.4% and 5% respectively.
 
ETF Impact
 
The blood bath in these tech stocks also sent tech ETFs lower in the trading session. In particular, First Trust Dow Jones Internet Index Fund (FDN) and PowerShares NASDAQ Internet Portfolio (PNQI) lost more than 2.4% each on the day (read: Top Ranked Technology ETF in Focus: QTEC).
 
Below we have discussed both the ETFs in greater detail:
 
FDN
 
The big caps of the NASDAQ index – Netfilx, Amazon, Google and Facebook – occupy the top positions in the basket with a combined share of more 27% of assets.
 
The fund tracks the First Trust Dow Jones Internet Index and is one of the most popular ETFs in the broad tech space. The fund holds a basket of 41 stocks and has amassed $2.3 billion since inception. It fell with elevated volumes of more than three times the average daily volume to start the week.
 
The fund charges 57 basis points annually (see all Technology ETFs here).
 
PNQI
 
The fund tracks the PowerShares NASDAQ Internet Portfolio, holding 99 stocks in its portfolio. The index tracks the performance of the largest and most liquid U.S.-listed companies engaged in Internet-related businesses.
 
Netfilx, Amazon, Google and Facebook rank among the top ten holdings of PNQI and collectively form around 30% of total assets. The fund fell around 2.6% to start the week with more than 2.5 times its average daily volume of 78,367 shares a day (read: 5 Best Performing ETFs of the 5 Year Bull Run).
 
Bottom Line
 
Though the above tech ETFs took a beating yesterday, these are expected to recover and continue with their impressive performance seen last year. Both the ETFs have outperformed the most popular tech ETF – Technology Select Sector SPDR (XLK) – in the past one year.
 
While XLK has returned 22% in the past one year, FDN and PNQI have added a handsome 41.3% and 52.2%, respectively, in the past one year.
 
Further, the above two products have a top Zacks Rank of ‘1’ or ‘2’, suggesting that these will likely outperform the broad market index over a one-year period. Investors can therefore use these dips to accumulate the ETFs now.
 
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APPLE INC (AAPL): Free Stock Analysis Report
 
FT-DJ INTRNT IX (FDN): ETF Research Reports
 
NETFLIX INC (NFLX): Free Stock Analysis Report
 
PWRSH-ND INTRNT (PNQI): ETF Research Reports
 
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