Additionally, many of the so-called Internet 2.0 stocks have made their way into the fund including LinkedIn ( LNKD), with a 3.7% weighting; Facebook, ( FB) at 3.6%, and even Groupon ( GRPN), which now weighs in at 1.6%. Where Internet stocks are generally a higher growth niche within the tech sector it makes sense to expect that FDN would go up more than the overall sector in general during a bull phase and down more during a bear phase, and this has pretty much played out. During the bear market FDN went down slightly more than the broad-based iShares US Technology ETF ( IYW). In the last three years though, FDN is up 60% compared to just 24% for IYW.
For the time being, Federal Reserve policy is having the effect of rewarding risk-taking in the stock market, which makes the case for continued outperformance from FDN over a broad fund like IYW -- but there will be setbacks along the way. After the close on Thursday LinkedIn reported first-quarter earnings and revenues that exceeded estimates but the company reduced guidance for the second quarter and the stock dropped 10% in after-hours trading. This could be a setback for the stock but an opportunity to buy the fund. At the time of publication, clients of the author's firm owned IYW. Follow @randomroger This article was written by an independent contributor, separate from TheStreet's regular news coverage.