One of First Trust's largest and most popular exchange-traded funds (ETFs), the First Trust Dow Jones Internet Index Fund (FDN), reached its 15th anniversary on June 19, 2021. Since its launch, FDN has produced an admirable track record, offering investment professionals an attractive investment option for their clients. As we consider other thematic growth opportunities that lie on the horizon, we believe there are important lessons that can be learned by looking back at FDN over the past decade and a half.
Volatility is the price of performance.
To benefit from FDN's outperformance over the past 15 years, investors had to accept volatility. Since inception, FDN has had seven drawdowns greater than 20%, according to Bloomberg as of 6/28/21. On average, that's nearly one every other year. In other words, most investors had ample opportunities to think they had bought at the wrong time. Volatility may lead many investors to move money out of the market and "sit on the sidelines" until things "calm down." We believe the wiser course of action is to review your plan with your financial professional and from there, decide if any action is indeed necessary. History has shown that those who chose to stay the course were rewarded for their patience more often than not.