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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) made its debut on 04/19/2006, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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 sponsored by First Trust Advisors. It has amassed assets over $1.41 billion, making it one of the larger ETFs in the Technology ETFs. Before fees and expenses, this particular fund 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 QTEC, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.09%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For QTEC, it has heaviest allocation in the Information Technology sector --about 93% 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) .
The top 10 holdings account for about 27.25% of total assets under management.
Performance and Risk
So far this year, QTEC has lost about -39.30%, and is down about -37.66% in the last one year (as of 11/02/2022). During this past 52-week period, the fund has traded between $98.17 and $180.39.
QTEC has a beta of 1.14 and standard deviation of 34.54% 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 $38.40 billion in assets, Vanguard Information Technology ETF has $39.74 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) made its debut on 04/19/2006, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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 sponsored by First Trust Advisors. It has amassed assets over $1.41 billion, making it one of the larger ETFs in the Technology ETFs. Before fees and expenses, this particular fund 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 QTEC, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.09%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For QTEC, it has heaviest allocation in the Information Technology sector --about 93% 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) .
The top 10 holdings account for about 27.25% of total assets under management.
Performance and Risk
So far this year, QTEC has lost about -39.30%, and is down about -37.66% in the last one year (as of 11/02/2022). During this past 52-week period, the fund has traded between $98.17 and $180.39.
QTEC has a beta of 1.14 and standard deviation of 34.54% 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 $38.40 billion in assets, Vanguard Information Technology ETF has $39.74 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.