Designed to provide broad exposure to the Technology - Broad segment of the equity market, the First Trust NASDAQ100Technology Sector ETF (
QTEC Quick Quote QTEC - Free Report) is a passively managed exchange traded fund launched on 04/19/2006.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.72 billion, making it one of the larger ETFs attempting to match the performance of the Technology - Broad segment of the equity market. QTEC 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.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.56%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.04%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 92% of the portfolio.
Looking at individual holdings, Splunk Inc. (
SPLK Quick Quote SPLK - Free Report) accounts for about 2.57% of total assets, followed by Advanced Micro Devices, Inc. ( AMD Quick Quote AMD - Free Report) and Nvidia Corporation ( NVDA Quick Quote NVDA - Free Report) .
The top 10 holdings account for about 24.85% of total assets under management.
Performance and Risk
Year-to-date, the First Trust NASDAQ100Technology Sector ETF has lost about -29.90% so far, and is down about -21.22% over the last 12 months (as of 06/27/2022). QTEC has traded between $110.94 and $180.39 in this past 52-week period.
The ETF has a beta of 1.13 and standard deviation of 33.18% for the trailing three-year period, making it a high risk choice in the space. With about 43 holdings, it has more concentrated exposure than peers.
First Trust NASDAQ100Technology Sector ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, QTEC is an outstanding option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Technology Select Sector SPDR ETF (
XLK Quick Quote XLK - Free Report) tracks Technology Select Sector Index and the Vanguard Information Technology ETF ( VGT Quick Quote VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $40 billion in assets, Vanguard Information Technology ETF has $42.17 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%. Bottom Line
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