Internet Fund vs. Social Media IPOs

NEW YORK (TheStreet) -- The Internet realm has been thrust into the spotlight following last week's LinkedIn(LNKD)'s trading debut. While exciting to watch, investing in this industry could prove tricky in the weeks ahead.

Despite the rampant investor interest, clearly much remains unknown about firms like LNKD and Russia's Yandex, which will take the stock symbol YNDX when it begins trading. Until the dust settles, it will be difficult to judge how they will perform. Already, in the aftermath following the LinkedIn's explosive action late last week, many analysts and commentators have already begun to clamor over whether or not we are witnessing signs of a new dot-com bubble.

Given the swirling uncertainty, I caution against diving into any of these newly IPOed companies at this time. This does not mean, however, that investors should shun this corner of the tech sector entirely. On the contrary, ETFs with heavy focus on online firms may be well-positioned to benefit in the near term as interest in the Internet reaches a boiling point.

I have often pointed out the First Trust Dow Jones Internet Index Fund(FDN) as a strong option for investors looking for a unique way to target the technology sector over the long run. However, in the nearer term, this fund could also prove to be a safe way to profit as companies like LinkedIn stay on the forefront of investors' minds.

Since it launched in 2006, FDN has been dedicated to providing investors with exposure to the most attractive companies in the Internet. Today, the fund's index includes heavy exposure to large, online goliaths like Google(GOOG), Amazon(AMZN) and eBay(EBAY). While these companies comprise the largest slices of the fund's portfolio FDN also sets aside a substantial portion of its assets for smaller players including Netflix(NFLX) and salesforce.com(CRM).

Whereas companies like LinkedIn and Yandex will likely prove volatile in the near term as they work to solidify their places in the broader markets, the firms underlying FDN have already developed a substantial, dedicated following.

According to FDN's website, companies considered for the Dow Jones Internet Index must have had at least three months of trading history. Additionally, during this period, the company must have an average capitalization of $100 million; an average closing price over $10; and adequate liquidity.