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Holiday ETF Still Works

With a lot of Christmas shoppers procrastinating to the last moment, the First Trust's Dow Jones Internet Index ETF remains a good pick for investors.
Author:

NEW YORK (

TheStreet

) -- With Christmas looming on the horizon, last-minute shoppers are scouring

Amazon.com

(AMZN) - Get Report

and

eBay

(EBAY) - Get Report

for gifts and hopefully checking

Priceline

(PCLN)

and

Expedia

(EXPE) - Get Report

for plane tickets home.

While most consumers would prefer to have these purchases out of the way before mid-December, the age of the Internet has enabled a new level of procrastination. If you're up for taking the likely bet that many consumers are still combing the Web for Christmas purchases, the best way to do it is with

First Trust's Dow Jones Internet Index ETF

(FDN) - Get Report

.

This narrowly themed technology ETF targets companies that generate at least 50% their annual sales/revenues from the Internet. From search engines like

Google

(GOOG) - Get Report

and

Yahoo!

(YHOO)

to high-end retailers like

Blue Nile

(NILE)

TheStreet Recommends

, FDN's components should see a lot of traffic in the days ahead.

Since I

first recommended FDN

on Oct. 21, shares have advanced nearly 2%. FDN is currently a holding in the

ETF Action

portfolio.

If you put off buying this fund the first time around, however, the prospects for this fund continue to be bright as Christmas draws closer.

According to a recent survey from the National Retail Federation, people had completed just 46.7% of their holiday shopping by the second week in December. This is the lowest level of completion since 2004, with nearly 20% of shoppers admitting that they hadn't even started yet.

Where will this statistically significant group of procrastinating shoppers turn? With thinner wallets and tighter budgets, many will check sites like Google or Yahoo, which allow shoppers to quickly compare prices. Amazon can help you find the perfect gift at the right price, wrap it, and get it to Grandma without her knowing you waited until Dec. 20.

Investors looking for a tech ETF that still has prospects, long after the eggnog is gone, should still consider FDN. Google's new deals with social networking sites will help this top FDN component sharpen Internet advertising in the months ahead.

Purchasers of Amazon's Kindle, or a package deal from FDN component

Netflix

(NFLX) - Get Report

, will return to these websites time and time again for content.

Beyond holiday shopping, FDN's portfolio also includes security maven

Checkpoint Systems

(CHKP) - Get Report

and infrastructure creator

Juniper Networks

(JNPR) - Get Report

. The largest two sector allocations in FDN's underlying portfolio are information technology and consumer discretionary, which comprise 69% and 21% of assets respectively.

As consumers increasingly snap open their laptop, rather than walking to the porch, for the daily paper, the pressure is on Internet megastars to market to the next generation of customers.

From research to trading to travel reservations, the Internet has become the nexus for many aspects of our day to day lives. Members of FDN's underlying portfolio have embraced this shift, and learned to profit from it. Investors would be wise to check out this fund sooner, rather than later.

-- Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion Money Management owns First Trust's Dow Jones Internet Index ETF.

Don Dion is president and founder of

Dion Money Management

, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.