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Is First Trust NASDAQ-100-Technology Sector ETF (QTEC) a Strong ETF Right Now?
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The First Trust NASDAQ-100-Technology Sector ETF (QTEC - Free Report) was launched on 04/19/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 managed by First Trust Advisors. QTEC has been able to amass assets over $1.90 billion, making it one of the larger ETFs in the Technology ETFs. This particular fund seeks to match the performance of the NASDAQ-100 Technology Sector Index before fees and expenses.
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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.57% for QTEC, making it on par with most peer products in the space.
QTEC's 12-month trailing dividend yield is 0.21%.
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.
Representing 91.90% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
Looking at individual holdings, Micron Technology, Inc. (MU - Free Report) accounts for about 2.96% of total assets, followed by Zscaler, Inc. (ZS - Free Report) and Adobe Incorporated (ADBE - Free Report) .
Its top 10 holdings account for approximately 28.81% of QTEC's total assets under management.
Performance and Risk
Year-to-date, the First Trust NASDAQ-100-Technology Sector ETF return is roughly 37.32% so far, and was up about 19.14% over the last 12 months (as of 07/10/2023). QTEC has traded between $98.17 and $149.50 in this past 52-week period.
The fund has a beta of 1.16 and standard deviation of 31.19% for the trailing three-year period, which makes QTEC a high risk choice in this particular space. With about 38 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ-100-Technology 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 $49.19 billion in assets, Vanguard Information Technology ETF has $52.01 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 NASDAQ-100-Technology Sector ETF (QTEC) a Strong ETF Right Now?
The First Trust NASDAQ-100-Technology Sector ETF (QTEC - Free Report) was launched on 04/19/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 managed by First Trust Advisors. QTEC has been able to amass assets over $1.90 billion, making it one of the larger ETFs in the Technology ETFs. This particular fund seeks to match the performance of the NASDAQ-100 Technology Sector Index before fees and expenses.
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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.57% for QTEC, making it on par with most peer products in the space.
QTEC's 12-month trailing dividend yield is 0.21%.
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.
Representing 91.90% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
Looking at individual holdings, Micron Technology, Inc. (MU - Free Report) accounts for about 2.96% of total assets, followed by Zscaler, Inc. (ZS - Free Report) and Adobe Incorporated (ADBE - Free Report) .
Its top 10 holdings account for approximately 28.81% of QTEC's total assets under management.
Performance and Risk
Year-to-date, the First Trust NASDAQ-100-Technology Sector ETF return is roughly 37.32% so far, and was up about 19.14% over the last 12 months (as of 07/10/2023). QTEC has traded between $98.17 and $149.50 in this past 52-week period.
The fund has a beta of 1.16 and standard deviation of 31.19% for the trailing three-year period, which makes QTEC a high risk choice in this particular space. With about 38 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ-100-Technology 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 $49.19 billion in assets, Vanguard Information Technology ETF has $52.01 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.