Equity: U.S. Internet

PXQ Top Performer Intra-day
Price $41.33
Today’s Change +0.52%(1.27)
1:59pm 01/13/2017
XWEB Bottom Performer Intra-day
Price 0.00
Today’s Change 0.00%(0.00)
  • Overview
  • Efficiency
  • Tradability
  • Fit

ETF.com Insight

The US Internet segment is home to three ETFs with completely different approaches to capturing the market. FDN holds a broad, market-cap-weighted set of US Internet companies, focusing onthe funds differ in costs and risks to hold and to trade the biggest of the big. PNQI is broader still, but includes international companies with U.S. listings—about 16% of its portfolio is located overseas. PNQI also implements a more complicated weighting scheme that caps the biggest companies at 8% and redistributes their excess weight to the smaller companies. PXQ focuses narrowly on networking companies and limits its portfolio to the 30-highest-ranked companies according to its quantitative model.
Exposure aside, the funds differ in costs and risks to hold and to trade. FDN leads the pack by far with respect to both assets and liquidity and charges 60 bps annually. PNQI charges the same 60 bps but has much wider spreads (24 bps) than FDN (4 bps), driving total costs up. PXQ charges slightly more and has about the same spreads as PXQI. (Insight updated 01/16/17)

All Funds (4)

FDN $3.69 B 3687425168.568 AUM & Liquidity Leader

A 42
E
90
90
T
98
98
F
42
42

PNQI $281.01 M 281008000 Tracks Well but Trades Thinly

B 49
E
88
88
T
91
91
F
49
49

PXQ $26.74 M 26741000 Mediocre Trader

B 20
E
88
88
T
65
65
F
20
20

XWEB $5.98 M 5975624.5 N/A

F 27
E
56
56
T
57
57
F
27
27

ETF.com Grade as 01/12/17

Equity: U.S. Internet

1 Year Total Return NAV
Performance  [as of 01/13/17] 1 Month 3 Month YTD 1 Year 3 Years 5 Years 10 Years
Benchmark: Thomson Reuters US Internet Services Total Return Index3.46%3.64%6.99%--14.60%24.07%--
A 42.380582FDN3687425168.568FDNFirst Trust Dow Jones Internet Index Fund3.72%7.01%6.46%29.12%12.81%21.18%13.70%
B 48.567664PNQI281008000PNQIPowerShares NASDAQ Internet Portfolio3.22%1.23%6.17%18.76%8.74%19.76%--
B 19.829975PXQ26741000PXQPowerShares Dynamic Networking Portfolio-0.08%4.65%1.09%30.77%9.41%10.04%8.40%
F 26.752945XWEB5975624.5XWEBSPDR S&P Internet ETF1.43%1.26%3.43%--------
All returns over 1 year are annualized. All returns are total returns unless otherwise stated.

ETF.com Efficiency Insight

The three US Internet funds charge similar fees and share similar scores, but important cost and risk differences exist. PNQI and FDN share top honors for the lowest fee, charging 60 bpsFDN is the clear favorite in assets annually. However, PNQI’s actual all-in costs are higher due to its much larger spreads.
FDN is also the clear favorite in another area: assets. Its $2B in AUM is roughly 90% of the total for the segment. Often, asset-leaders like FDN are the first movers in the space, but that’s not true here. PXQ’s 2005 launch predates FDN by a year, yet that fund holds less than $30M. We still see minimal fund closure risk for PXQ at this time but some investors may not be comfortable with its asset level. (Insight updated 01/16/17)

All Funds (4)

90
90.472447
88
88.435276
88
88.257572
56
55.718672

ETF.com Grade as 01/12/17

Equity: U.S. Internet

Tracking Difference (12 Month)

Ticker Expense Ratio Median Max. Upside Max. Downside Max LT/ST Cap Gains Rate Rule Legal Structure Fund Closure Risk Efficiency
FDN First Trust Dow Jones Internet Index Fund 0.54% -0.54% -0.48% -0.67% 20.00% / 39.60% Low 90.472447
PNQI PowerShares NASDAQ Internet Portfolio 0.60% -0.58% -0.53% -0.69% 20.00% / 39.60% Low 88.435276
PXQ PowerShares Dynamic Networking Portfolio 0.63% -0.35% -0.29% -0.67% 20.00% / 39.60% Low 88.257572
XWEB SPDR S&P Internet ETF 0.35% -- -- -- 20.00% / 39.60% High 55.718672

ETF.com Tradability Insight

FDN simply dominates the segment in liquidity, and it’s the only fund here offering robust Tradability across the board. Small investors can expect tight bid/ask spreads and briskFDN is the only fund here offering robust Tradability across the board volume. Large investors working with liquidity providers should also see low costs and can expect minimal price impact on creates and redeems.
PXQ and PNQI fall in the second tier of Tradability. Compared with FDN, they trade at much wider spreads and far less volume. For retail investors, this means that the funds are accessible, but extra care is needed to transact, and that trading expense should be considered in the context of the intended holding period. (Insight updated 01/16/17)

All Funds (4)

98
97.756223
91
91.26645
65
64.633504
57
57.12964

ETF.com Grade as 01/12/17

Equity: U.S. Internet

Ticker Median Daily Volume ($) Average Spread Creation Unit/Day Market Hours Overlap Underlying Volume/Unit % Creation Cost Per Unit (%) Impediment to Creations Score - Tradability
FDN First Trust Dow Jones Internet Index Fund $30.01 M 0.04% 7.41 100.00% 0.12% 0.01% None 97.756223
PNQI PowerShares NASDAQ Internet Portfolio $1.36 M 0.17% 0.32 100.00% 0.06% 0.01% None 91.26645
PXQ PowerShares Dynamic Networking Portfolio $118.44 K 0.21% 0.06 100.00% 0.19% 0.02% None 64.633504
XWEB SPDR S&P Internet ETF $6.08 K 0.35% 0.00 100.00% 0.02% 0.01% None 57.12964
Spread History
Premium/Discount History

ETF.com/ Block Liquidity

FDN
5
4
3
2
1
PNQI
5
4
3
2
1
PXQ
5
4
3
2
1
XWEB
5
4
3
2
1

This measurement shows how easy it is to trade 25,000 shares of each ETF.

ETF.com Fit Insight

Investors have a broad range of coverage choices within the narrow scope of US Internet funds. All three funds track indexes with a smaller average market cap than our benchmark'sThose looking for plain vanilla exposure have an excellent choice in FDN definition of the market. Of our funds, FDN is the only fund in the segment to offer market cap selection and weighting, and unlike some peers, delivers pure US coverage.
In comparison, PNQI caps the weights of its top holdings at 8% for the top 5 and 4% for the remaining securities in an attempt to rein in the impact of industry giants like Google.  Despite this methodology, the fund has an higher average market cap than FDN, which better resembles our benchmark. PNQI includes US-listed ADRs in firms like Baidu, China’s answer to Google. In all, about 16% of its portfolio is allocated to international companies.
PXQ weights its holdings equally in tiers, and as a result, tilts very small: Its weighted-average market cap is about 1/10th that of the benchmark. Despite the bias toward smaller firms the PXQ's market risk is significantly lower (beta of around 0.70).  That is likely due to different industry exposures than our benchmark as the fund heavily emphasizes communications and networking as well as IT services firms. This intentional difference from broad coverage lowers its Fit score and could appeal to investors interested in this narrow niche, but has nonetheless dramatically lagged our benchmark over the past 12 months.
In sum, the three funds provide radically different exposure. FDN offers excellent plain-vanilla coverage, PNQIs broad coverage includes foreign firms, and PXQ focuses narrowly on certain subsegments of the internet industry. (Insight updated 01/16/17)

All Funds (4)

42
42.380582
49
48.567664
27
26.752945
20
19.829975

ETF.com Grade as 01/12/17

Equity: U.S. Internet