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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?
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $1.61 billion, which makes it one of the larger ETFs in the Technology ETFs. QTEC, 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.56%.
It has a 12-month trailing dividend yield of 0.04%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 91.60% of the portfolio.
When you look at 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) .
Its top 10 holdings account for approximately 24.85% of QTEC's total assets under management.
Performance and Risk
So far this year, QTEC has lost about -34.63%, and is down about -28.03% in the last one year (as of 07/01/2022). During this past 52-week period, the fund has traded between $110.94 and $180.39.
The fund has a beta of 1.14 and standard deviation of 33.33% 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 $37.90 billion in assets, Vanguard Information Technology ETF has $40.03 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?
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $1.61 billion, which makes it one of the larger ETFs in the Technology ETFs. QTEC, 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.56%.
It has a 12-month trailing dividend yield of 0.04%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 91.60% of the portfolio.
When you look at 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) .
Its top 10 holdings account for approximately 24.85% of QTEC's total assets under management.
Performance and Risk
So far this year, QTEC has lost about -34.63%, and is down about -28.03% in the last one year (as of 07/01/2022). During this past 52-week period, the fund has traded between $110.94 and $180.39.
The fund has a beta of 1.14 and standard deviation of 33.33% 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 $37.90 billion in assets, Vanguard Information Technology ETF has $40.03 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.