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Is First Trust NASDAQ100Technology Sector ETF (QTEC) a Strong ETF Right Now?
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The First Trust NASDAQ100Technology 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?
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
QTEC is managed by First Trust Advisors, and this fund has amassed over $2.11 billion, which makes it one of the larger ETFs in the Technology ETFs. This particular fund, before fees and expenses, 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.57%.
It has a 12-month trailing dividend yield of 0.02%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 91% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
Taking into account individual holdings, Splunk Inc. accounts for about 2.57% of the fund's total assets, followed by Advanced Micro Devices, Inc. (AMD - Free Report) and Nvidia Corporation (NVDA - Free Report) .
The top 10 holdings account for about 24.85% of total assets under management.
Performance and Risk
The ETF has lost about -22.42% and is down about -10.19% so far this year and in the past one year (as of 04/26/2022), respectively. QTEC has traded between $131.75 and $180.39 during this last 52-week period.
The fund has a beta of 1.09 and standard deviation of 31.44% for the trailing three-year period, which makes QTEC a high risk choice in this particular 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 $43.95 billion in assets, Vanguard Information Technology ETF has $46.16 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?
The First Trust NASDAQ100Technology 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?
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
QTEC is managed by First Trust Advisors, and this fund has amassed over $2.11 billion, which makes it one of the larger ETFs in the Technology ETFs. This particular fund, before fees and expenses, 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.57%.
It has a 12-month trailing dividend yield of 0.02%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 91% of the portfolio, the fund has heaviest allocation to the Information Technology sector.
Taking into account individual holdings, Splunk Inc. accounts for about 2.57% of the fund's total assets, followed by Advanced Micro Devices, Inc. (AMD - Free Report) and Nvidia Corporation (NVDA - Free Report) .
The top 10 holdings account for about 24.85% of total assets under management.
Performance and Risk
The ETF has lost about -22.42% and is down about -10.19% so far this year and in the past one year (as of 04/26/2022), respectively. QTEC has traded between $131.75 and $180.39 during this last 52-week period.
The fund has a beta of 1.09 and standard deviation of 31.44% for the trailing three-year period, which makes QTEC a high risk choice in this particular 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 $43.95 billion in assets, Vanguard Information Technology ETF has $46.16 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.