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Is First Trust NASDAQ100Technology Sector ETF (QTEC) a Strong ETF Right Now?
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Designed to provide broad exposure to the Technology ETFs category of the market, the First Trust NASDAQ100Technology Sector ETF (QTEC - Free Report) is a smart beta exchange traded fund launched on 04/19/2006.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.37 billion, making it one of the larger ETFs in the Technology ETFs. Before fees and expenses, QTEC seeks to match the performance of the NASDAQ-100 Technology Sector Index.
The NASDAQ-100 Technology Sector Index is an equal-weighted index based on the securities of the NASDAQ-100 Index that are classified as technology.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.56% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.15%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
QTEC's heaviest allocation is in the Information Technology sector, which is about 92.20% of the portfolio.
Taking into account individual holdings, Atlassian Corporation Plc (class A) (TEAM - Free Report) accounts for about 3.27% of the fund's total assets, followed by Autodesk, Inc. (ADSK - Free Report) and Cadence Design Systems, Inc. (CDNS - Free Report) .
QTEC's top 10 holdings account for about 27.25% of its total assets under management.
Performance and Risk
So far this year, QTEC has added roughly 0.87%, and is down about -38.26% in the last one year (as of 01/05/2023). During this past 52-week period, the fund has traded between $98.17 and $167.78.
QTEC has a beta of 1.15 and standard deviation of 35.75% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 43 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ100Technology Sector ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Technology Select Sector SPDR ETF (XLK - Free Report) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $37.82 billion in assets, Vanguard Information Technology ETF has $39.21 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is First Trust NASDAQ100Technology Sector ETF (QTEC) a Strong ETF Right Now?
Designed to provide broad exposure to the Technology ETFs category of the market, the First Trust NASDAQ100Technology Sector ETF (QTEC - Free Report) is a smart beta exchange traded fund launched on 04/19/2006.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.37 billion, making it one of the larger ETFs in the Technology ETFs. Before fees and expenses, QTEC seeks to match the performance of the NASDAQ-100 Technology Sector Index.
The NASDAQ-100 Technology Sector Index is an equal-weighted index based on the securities of the NASDAQ-100 Index that are classified as technology.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.56% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.15%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
QTEC's heaviest allocation is in the Information Technology sector, which is about 92.20% of the portfolio.
Taking into account individual holdings, Atlassian Corporation Plc (class A) (TEAM - Free Report) accounts for about 3.27% of the fund's total assets, followed by Autodesk, Inc. (ADSK - Free Report) and Cadence Design Systems, Inc. (CDNS - Free Report) .
QTEC's top 10 holdings account for about 27.25% of its total assets under management.
Performance and Risk
So far this year, QTEC has added roughly 0.87%, and is down about -38.26% in the last one year (as of 01/05/2023). During this past 52-week period, the fund has traded between $98.17 and $167.78.
QTEC has a beta of 1.15 and standard deviation of 35.75% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 43 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ100Technology Sector ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Technology Select Sector SPDR ETF (XLK - Free Report) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $37.82 billion in assets, Vanguard Information Technology ETF has $39.21 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.